Correlation Between Exscientia and Abeona Therapeutics

Can any of the company-specific risk be diversified away by investing in both Exscientia and Abeona Therapeutics 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 Exscientia and Abeona Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exscientia Ltd ADR and Abeona Therapeutics, you can compare the effects of market volatilities on Exscientia and Abeona Therapeutics 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 Exscientia with a short position of Abeona Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exscientia and Abeona Therapeutics.

Diversification Opportunities for Exscientia and Abeona Therapeutics

-0.52

Correlation Coefficient

Exscientia  Abeona Therapeutics

Excellent diversification

The 3 months correlation between Exscientia and Abeona is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Exscientia Ltd ADR and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Exscientia 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 Exscientia Ltd ADR are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Exscientia i.e., Exscientia and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Exscientia and Abeona Therapeutics

Given the investment horizon of 90 days Exscientia is expected to generate 8.6 times less return on investment than Abeona Therapeutics. In addition to that, Exscientia is 1.33 times more volatile than Abeona Therapeutics. It trades about 0.01 of its total potential returns per unit of risk. Abeona Therapeutics is currently generating about 0.11 per unit of volatility. If you would invest  546.00  in Abeona Therapeutics on August 31, 2024 and sell it today you would earn a total of  95.00  from holding Abeona Therapeutics or generate 17.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.06%
Values	Daily Returns

Exscientia Ltd ADR  vs.  Abeona Therapeutics

Exscientia ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exscientia Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Exscientia is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Abeona Therapeutics

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abeona Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Abeona Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exscientia and Abeona Therapeutics

The main advantage of trading using opposite Exscientia and Abeona Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exscientia position performs unexpectedly, Abeona Therapeutics 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 Abeona Therapeutics will offset losses from the drop in Abeona Therapeutics' long position.

The idea behind Exscientia Ltd ADR and Abeona Therapeutics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.