Correlation Between Green Cross and ABL Bio
Can any of the company-specific risk be diversified away by investing in both Green Cross and ABL Bio 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 Green Cross and ABL Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Lab and ABL Bio, you can compare the effects of market volatilities on Green Cross and ABL Bio 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 Green Cross with a short position of ABL Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and ABL Bio.
Diversification Opportunities for Green Cross and ABL Bio
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Green and ABL is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Lab and ABL Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL Bio and Green Cross 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 Green Cross Lab are associated (or correlated) with ABL Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL Bio has no effect on the direction of Green Cross i.e., Green Cross and ABL Bio go up and down completely randomly.
Pair Corralation between Green Cross and ABL Bio
Assuming the 90 days trading horizon Green Cross Lab is expected to under-perform the ABL Bio. But the stock apears to be less risky and, when comparing its historical volatility, Green Cross Lab is 2.31 times less risky than ABL Bio. The stock trades about -0.08 of its potential returns per unit of risk. The ABL Bio is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,715,000 in ABL Bio on October 24, 2024 and sell it today you would earn a total of 530,000 from holding ABL Bio or generate 19.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Green Cross Lab vs. ABL Bio
Performance |
| Timeline |
| Green Cross Lab |
| ABL Bio |
Green Cross and ABL Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and ABL Bio
The main advantage of trading using opposite Green Cross and ABL Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, ABL Bio 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 ABL Bio will offset losses from the drop in ABL Bio's long position.| Green Cross vs. Golden Bridge Investment | Green Cross vs. Leaders Technology Investment | Green Cross vs. NICE Information Service | Green Cross vs. System and Application |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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