Correlation Between Abingdon Health and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Abingdon Health and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Golden Metal.
Diversification Opportunities for Abingdon Health and Golden Metal
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Abingdon and Golden is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Abingdon Health i.e., Abingdon Health and Golden Metal go up and down completely randomly.
Pair Corralation between Abingdon Health and Golden Metal
Assuming the 90 days trading horizon Abingdon Health is expected to generate 13.14 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Abingdon Health Plc is 9.89 times less risky than Golden Metal. It trades about 0.04 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Golden Metal Resources on September 2, 2024 and sell it today you would earn a total of 3,041 from holding Golden Metal Resources or generate 33788.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.36% |
| Values | Daily Returns |
Abingdon Health Plc vs. Golden Metal Resources
Performance |
| Timeline |
| Abingdon Health Plc |
| Golden Metal Resources |
Abingdon Health and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Golden Metal
The main advantage of trading using opposite Abingdon Health and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Abingdon Health vs. McEwen Mining | Abingdon Health vs. Dentsply Sirona | Abingdon Health vs. Baker Steel Resources | Abingdon Health vs. Blackrock World Mining |
| Golden Metal vs. Fevertree Drinks Plc | Golden Metal vs. Ion Beam Applications | Golden Metal vs. Fidelity National Information | Golden Metal vs. Batm Advanced Communications |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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