Correlation Between Day One and ABVC Biopharma

Can any of the company-specific risk be diversified away by investing in both Day One and ABVC Biopharma at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Day One and ABVC Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Day One Biopharmaceuticals and ABVC Biopharma, you can compare the effects of market volatilities on Day One and ABVC Biopharma and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Day One with a short position of ABVC Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Day One and ABVC Biopharma.

Diversification Opportunities for Day One and ABVC Biopharma

0.18

Correlation Coefficient

Day One  ABVC Biopharma

Average diversification

The 3 months correlation between Day and ABVC is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and ABVC Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABVC Biopharma and Day One is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Day One Biopharmaceuticals are associated (or correlated) with ABVC Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABVC Biopharma has no effect on the direction of Day One i.e., Day One and ABVC Biopharma go up and down completely randomly.

Pair Corralation between Day One and ABVC Biopharma

Given the investment horizon of 90 days Day One Biopharmaceuticals is expected to under-perform the ABVC Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Day One Biopharmaceuticals is 1.95 times less risky than ABVC Biopharma. The stock trades about -0.21 of its potential returns per unit of risk. The ABVC Biopharma is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  55.00  in ABVC Biopharma on September 15, 2024 and sell it today you would lose (4.00) from holding ABVC Biopharma or give up 7.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Day One Biopharmaceuticals  vs.  ABVC Biopharma

Day One Biopharmaceu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Day One Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Day One is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ABVC Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABVC Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Day One and ABVC Biopharma

The main advantage of trading using opposite Day One and ABVC Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Day One position performs unexpectedly, ABVC Biopharma can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ABVC Biopharma will offset losses from the drop in ABVC Biopharma's long position.

The idea behind Day One Biopharmaceuticals and ABVC Biopharma pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.