Correlation Between ABL Bio and SillaJen
Can any of the company-specific risk be diversified away by investing in both ABL Bio and SillaJen 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 SillaJen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABL Bio and SillaJen, you can compare the effects of market volatilities on ABL Bio and SillaJen 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 SillaJen. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABL Bio and SillaJen.
Diversification Opportunities for ABL Bio and SillaJen
Excellent diversification
The 3 months correlation between ABL and SillaJen is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding ABL Bio and SillaJen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SillaJen 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 SillaJen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SillaJen has no effect on the direction of ABL Bio i.e., ABL Bio and SillaJen go up and down completely randomly.
Pair Corralation between ABL Bio and SillaJen
Assuming the 90 days trading horizon ABL Bio is expected to generate 1.04 times more return on investment than SillaJen. However, ABL Bio is 1.04 times more volatile than SillaJen. It trades about 0.03 of its potential returns per unit of risk. SillaJen is currently generating about -0.05 per unit of risk. If you would invest 2,300,000 in ABL Bio on September 2, 2024 and sell it today you would earn a total of 420,000 from holding ABL Bio or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABL Bio vs. SillaJen
Performance |
| Timeline |
| ABL Bio |
| SillaJen |
ABL Bio and SillaJen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABL Bio and SillaJen
The main advantage of trading using opposite ABL Bio and SillaJen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABL Bio position performs unexpectedly, SillaJen 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 SillaJen will offset losses from the drop in SillaJen's long position.The idea behind ABL Bio and SillaJen 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.| SillaJen vs. Samsung Electronics Co | SillaJen vs. Samsung Electronics Co | SillaJen vs. LG Energy Solution | SillaJen vs. SK Hynix |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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