Correlation Between ABB and Straumann Holding
Can any of the company-specific risk be diversified away by investing in both ABB and Straumann Holding 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 ABB and Straumann Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABB and Straumann Holding AG, you can compare the effects of market volatilities on ABB and Straumann Holding 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 ABB with a short position of Straumann Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB and Straumann Holding.
Diversification Opportunities for ABB and Straumann Holding
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ABB and Straumann is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding ABB and Straumann Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Straumann Holding and ABB 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 ABB are associated (or correlated) with Straumann Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Straumann Holding has no effect on the direction of ABB i.e., ABB and Straumann Holding go up and down completely randomly.
Pair Corralation between ABB and Straumann Holding
Assuming the 90 days trading horizon ABB is expected to generate 0.59 times more return on investment than Straumann Holding. However, ABB is 1.69 times less risky than Straumann Holding. It trades about 0.14 of its potential returns per unit of risk. Straumann Holding AG is currently generating about 0.0 per unit of risk. If you would invest 4,686 in ABB on September 12, 2024 and sell it today you would earn a total of 508.00 from holding ABB or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABB vs. Straumann Holding AG
Performance |
| Timeline |
| ABB |
| Straumann Holding |
ABB and Straumann Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABB and Straumann Holding
The main advantage of trading using opposite ABB and Straumann Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABB position performs unexpectedly, Straumann Holding 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 Straumann Holding will offset losses from the drop in Straumann Holding's long position.The idea behind ABB and Straumann Holding AG 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.| Straumann Holding vs. Sonova H Ag | Straumann Holding vs. Sika AG | Straumann Holding vs. Lonza Group AG | Straumann Holding vs. Givaudan SA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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