Correlation Between Emergent Biosolutions and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both Emergent Biosolutions and Abingdon Health 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 Emergent Biosolutions and Abingdon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emergent Biosolutions and Abingdon Health Plc, you can compare the effects of market volatilities on Emergent Biosolutions and Abingdon Health 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 Emergent Biosolutions with a short position of Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emergent Biosolutions and Abingdon Health.
Diversification Opportunities for Emergent Biosolutions and Abingdon Health
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Emergent and Abingdon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Biosolutions and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc and Emergent Biosolutions 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 Emergent Biosolutions are associated (or correlated) with Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of Emergent Biosolutions i.e., Emergent Biosolutions and Abingdon Health go up and down completely randomly.
Pair Corralation between Emergent Biosolutions and Abingdon Health
Assuming the 90 days trading horizon Emergent Biosolutions is expected to generate 2.66 times more return on investment than Abingdon Health. However, Emergent Biosolutions is 2.66 times more volatile than Abingdon Health Plc. It trades about 0.07 of its potential returns per unit of risk. Abingdon Health Plc is currently generating about 0.02 per unit of risk. If you would invest 877.00 in Emergent Biosolutions on September 5, 2024 and sell it today you would earn a total of 46.00 from holding Emergent Biosolutions or generate 5.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Emergent Biosolutions vs. Abingdon Health Plc
Performance |
| Timeline |
| Emergent Biosolutions |
| Abingdon Health Plc |
Emergent Biosolutions and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emergent Biosolutions and Abingdon Health
The main advantage of trading using opposite Emergent Biosolutions and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emergent Biosolutions position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| Emergent Biosolutions vs. Abingdon Health Plc | Emergent Biosolutions vs. Primary Health Properties | Emergent Biosolutions vs. PureTech Health plc | Emergent Biosolutions vs. HCA Healthcare |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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