Correlation Between ABCO Electronics and GeneBioTech
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics and GeneBioTech 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 ABCO Electronics and GeneBioTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and GeneBioTech Co, you can compare the effects of market volatilities on ABCO Electronics and GeneBioTech 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 ABCO Electronics with a short position of GeneBioTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and GeneBioTech.
Diversification Opportunities for ABCO Electronics and GeneBioTech
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ABCO and GeneBioTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and GeneBioTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneBioTech and ABCO Electronics 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 ABCO Electronics Co are associated (or correlated) with GeneBioTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneBioTech has no effect on the direction of ABCO Electronics i.e., ABCO Electronics and GeneBioTech go up and down completely randomly.
Pair Corralation between ABCO Electronics and GeneBioTech
Assuming the 90 days trading horizon ABCO Electronics Co is expected to generate 3.94 times more return on investment than GeneBioTech. However, ABCO Electronics is 3.94 times more volatile than GeneBioTech Co. It trades about 0.25 of its potential returns per unit of risk. GeneBioTech Co is currently generating about -0.46 per unit of risk. If you would invest 496,000 in ABCO Electronics Co on November 7, 2024 and sell it today you would earn a total of 69,000 from holding ABCO Electronics Co or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 88.89% |
| Values | Daily Returns |
ABCO Electronics Co vs. GeneBioTech Co
Performance |
| Timeline |
| ABCO Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| GeneBioTech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ABCO Electronics and GeneBioTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and GeneBioTech
The main advantage of trading using opposite ABCO Electronics and GeneBioTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics position performs unexpectedly, GeneBioTech 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 GeneBioTech will offset losses from the drop in GeneBioTech's long position.| ABCO Electronics vs. Shinhan Inverse Copper | ABCO Electronics vs. SK Chemicals Co | ABCO Electronics vs. Korea Information Communications | ABCO Electronics vs. Daehan Synthetic Fiber |
| GeneBioTech vs. Pan Entertainment Co | GeneBioTech vs. People Technology | GeneBioTech vs. Korea Plasma Technology | GeneBioTech vs. Barunson Entertainment Arts |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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