Correlation Between ABL Bio and AptaBio Therapeutics
Can any of the company-specific risk be diversified away by investing in both ABL Bio and AptaBio Therapeutics 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 AptaBio Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABL Bio and AptaBio Therapeutics, you can compare the effects of market volatilities on ABL Bio and AptaBio Therapeutics 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 AptaBio Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABL Bio and AptaBio Therapeutics.
Diversification Opportunities for ABL Bio and AptaBio Therapeutics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ABL and AptaBio is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ABL Bio and AptaBio Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AptaBio Therapeutics 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 AptaBio Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AptaBio Therapeutics has no effect on the direction of ABL Bio i.e., ABL Bio and AptaBio Therapeutics go up and down completely randomly.
Pair Corralation between ABL Bio and AptaBio Therapeutics
Assuming the 90 days trading horizon ABL Bio is expected to generate 0.82 times more return on investment than AptaBio Therapeutics. However, ABL Bio is 1.22 times less risky than AptaBio Therapeutics. It trades about 0.02 of its potential returns per unit of risk. AptaBio Therapeutics is currently generating about -0.02 per unit of risk. If you would invest 2,455,000 in ABL Bio on August 24, 2024 and sell it today you would earn a total of 250,000 from holding ABL Bio or generate 10.18% 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. AptaBio Therapeutics
Performance |
| Timeline |
| ABL Bio |
| AptaBio Therapeutics |
ABL Bio and AptaBio Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABL Bio and AptaBio Therapeutics
The main advantage of trading using opposite ABL Bio and AptaBio Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABL Bio position performs unexpectedly, AptaBio Therapeutics 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 AptaBio Therapeutics will offset losses from the drop in AptaBio Therapeutics' long position.The idea behind ABL Bio and AptaBio Therapeutics 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.| AptaBio Therapeutics vs. ABL Bio | AptaBio Therapeutics vs. Helixmith Co | AptaBio Therapeutics vs. OliX PharmaceuticalsInc | AptaBio Therapeutics vs. Oscotec |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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