Correlation Between Prosafe SE and ABB
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and ABB 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 Prosafe SE and ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and ABB, you can compare the effects of market volatilities on Prosafe SE and ABB 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 Prosafe SE with a short position of ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and ABB.
Diversification Opportunities for Prosafe SE and ABB
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prosafe and ABB is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB and Prosafe SE 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 Prosafe SE are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of Prosafe SE i.e., Prosafe SE and ABB go up and down completely randomly.
Pair Corralation between Prosafe SE and ABB
Assuming the 90 days horizon Prosafe SE is expected to under-perform the ABB. In addition to that, Prosafe SE is 2.27 times more volatile than ABB. It trades about -0.59 of its total potential returns per unit of risk. ABB is currently generating about 0.04 per unit of volatility. If you would invest 5,133 in ABB on August 30, 2024 and sell it today you would earn a total of 87.00 from holding ABB or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. ABB
Performance |
| Timeline |
| Prosafe SE |
| ABB |
Prosafe SE and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and ABB
The main advantage of trading using opposite Prosafe SE and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| Prosafe SE vs. Scientific Games | Prosafe SE vs. HEALTHCARE REAL A | Prosafe SE vs. OURGAME INTHOLDL 00005 | Prosafe SE vs. Hochschild Mining plc |
| ABB vs. Goodyear Tire Rubber | ABB vs. Sterling Construction | ABB vs. UNITED RENTALS | ABB vs. Applied Materials |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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