Correlation Between Abingdon Health and Admiral Group
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Admiral Group 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 Admiral Group 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 Admiral Group PLC, you can compare the effects of market volatilities on Abingdon Health and Admiral Group 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 Admiral Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Admiral Group.
Diversification Opportunities for Abingdon Health and Admiral Group
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Abingdon and Admiral is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Admiral Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Admiral Group PLC 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 Admiral Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Admiral Group PLC has no effect on the direction of Abingdon Health i.e., Abingdon Health and Admiral Group go up and down completely randomly.
Pair Corralation between Abingdon Health and Admiral Group
Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 3.45 times more return on investment than Admiral Group. However, Abingdon Health is 3.45 times more volatile than Admiral Group PLC. It trades about 0.04 of its potential returns per unit of risk. Admiral Group PLC is currently generating about 0.05 per unit of risk. If you would invest 450.00 in Abingdon Health Plc on August 26, 2024 and sell it today you would earn a total of 275.00 from holding Abingdon Health Plc or generate 61.11% 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. Admiral Group PLC
Performance |
| Timeline |
| Abingdon Health Plc |
| Admiral Group PLC |
Abingdon Health and Admiral Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Admiral Group
The main advantage of trading using opposite Abingdon Health and Admiral Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Admiral Group 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 Admiral Group will offset losses from the drop in Admiral Group's long position.| Abingdon Health vs. Cairo Communication SpA | Abingdon Health vs. Zurich Insurance Group | Abingdon Health vs. Jacquet Metal Service | Abingdon Health vs. United Internet AG |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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