Correlation Between Abingdon Health and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and CleanTech Lithium 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 CleanTech Lithium 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 CleanTech Lithium plc, you can compare the effects of market volatilities on Abingdon Health and CleanTech Lithium 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 CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and CleanTech Lithium.
Diversification Opportunities for Abingdon Health and CleanTech Lithium
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Abingdon and CleanTech is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Abingdon Health i.e., Abingdon Health and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Abingdon Health and CleanTech Lithium
Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 0.63 times more return on investment than CleanTech Lithium. However, Abingdon Health Plc is 1.58 times less risky than CleanTech Lithium. It trades about -0.12 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.17 per unit of risk. If you would invest 975.00 in Abingdon Health Plc on September 12, 2024 and sell it today you would lose (200.00) from holding Abingdon Health Plc or give up 20.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abingdon Health Plc vs. CleanTech Lithium plc
Performance |
| Timeline |
| Abingdon Health Plc |
| CleanTech Lithium plc |
Abingdon Health and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and CleanTech Lithium
The main advantage of trading using opposite Abingdon Health and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium's long position.| Abingdon Health vs. Symphony Environmental Technologies | Abingdon Health vs. X FAB Silicon Foundries | Abingdon Health vs. Sligro Food Group | Abingdon Health vs. Roebuck Food Group |
| CleanTech Lithium vs. Givaudan SA | CleanTech Lithium vs. Antofagasta PLC | CleanTech Lithium vs. Ferrexpo PLC | CleanTech Lithium vs. Atalaya Mining |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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