Correlation Between Abingdon Health and Axfood AB
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Axfood AB 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 Abingdon Health and Axfood AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abingdon Health Plc and Axfood AB, you can compare the effects of market volatilities on Abingdon Health and Axfood AB 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 Abingdon Health with a short position of Axfood AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Axfood AB.
Diversification Opportunities for Abingdon Health and Axfood AB
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Abingdon and Axfood is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB and Abingdon Health 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 Abingdon Health Plc are associated (or correlated) with Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of Abingdon Health i.e., Abingdon Health and Axfood AB go up and down completely randomly.
Pair Corralation between Abingdon Health and Axfood AB
Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 4.29 times more return on investment than Axfood AB. However, Abingdon Health is 4.29 times more volatile than Axfood AB. It trades about 0.11 of its potential returns per unit of risk. Axfood AB is currently generating about -0.02 per unit of risk. If you would invest 725.00 in Abingdon Health Plc on September 22, 2024 and sell it today you would earn a total of 50.00 from holding Abingdon Health Plc or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abingdon Health Plc vs. Axfood AB
Performance |
| Timeline |
| Abingdon Health Plc |
| Axfood AB |
Abingdon Health and Axfood AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Axfood AB
The main advantage of trading using opposite Abingdon Health and Axfood AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Axfood AB 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 Axfood AB will offset losses from the drop in Axfood AB's long position.| Abingdon Health vs. Samsung Electronics Co | Abingdon Health vs. Samsung Electronics Co | Abingdon Health vs. Hyundai Motor | Abingdon Health vs. Toyota Motor Corp |
| Axfood AB vs. European Metals Holdings | Axfood AB vs. AMG Advanced Metallurgical | Axfood AB vs. United States Steel | Axfood AB vs. Infrastrutture Wireless Italiane |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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