Correlation Between ABL Bio and Seegene
Can any of the company-specific risk be diversified away by investing in both ABL Bio and Seegene 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 ABL Bio and Seegene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABL Bio and Seegene, you can compare the effects of market volatilities on ABL Bio and Seegene 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 ABL Bio with a short position of Seegene. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABL Bio and Seegene.
Diversification Opportunities for ABL Bio and Seegene
Significant diversification
The 3 months correlation between ABL and Seegene is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ABL Bio and Seegene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seegene and ABL Bio 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 ABL Bio are associated (or correlated) with Seegene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seegene has no effect on the direction of ABL Bio i.e., ABL Bio and Seegene go up and down completely randomly.
Pair Corralation between ABL Bio and Seegene
Assuming the 90 days trading horizon ABL Bio is expected to generate 3.5 times more return on investment than Seegene. However, ABL Bio is 3.5 times more volatile than Seegene. It trades about 0.26 of its potential returns per unit of risk. Seegene is currently generating about -0.91 per unit of risk. If you would invest 3,075,000 in ABL Bio on November 6, 2024 and sell it today you would earn a total of 560,000 from holding ABL Bio or generate 18.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABL Bio vs. Seegene
Performance |
| Timeline |
| ABL Bio |
| Seegene |
ABL Bio and Seegene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABL Bio and Seegene
The main advantage of trading using opposite ABL Bio and Seegene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABL Bio position performs unexpectedly, Seegene 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 Seegene will offset losses from the drop in Seegene's long position.The idea behind ABL Bio and Seegene 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.| Seegene vs. Samsung Electronics Co | Seegene vs. Samsung Electronics Co | Seegene vs. KB Financial Group | Seegene vs. Shinhan Financial Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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