Correlation Between Abingdon Health and Seed Innovations
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Seed Innovations 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 Seed Innovations 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 Seed Innovations, you can compare the effects of market volatilities on Abingdon Health and Seed Innovations 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 Seed Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Seed Innovations.
Diversification Opportunities for Abingdon Health and Seed Innovations
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Abingdon and Seed is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of Abingdon Health i.e., Abingdon Health and Seed Innovations go up and down completely randomly.
Pair Corralation between Abingdon Health and Seed Innovations
Assuming the 90 days trading horizon Abingdon Health is expected to generate 5.63 times less return on investment than Seed Innovations. In addition to that, Abingdon Health is 2.44 times more volatile than Seed Innovations. It trades about 0.02 of its total potential returns per unit of risk. Seed Innovations is currently generating about 0.23 per unit of volatility. If you would invest 160.00 in Seed Innovations on October 26, 2024 and sell it today you would earn a total of 10.00 from holding Seed Innovations or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abingdon Health Plc vs. Seed Innovations
Performance |
| Timeline |
| Abingdon Health Plc |
| Seed Innovations |
Abingdon Health and Seed Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Seed Innovations
The main advantage of trading using opposite Abingdon Health and Seed Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Seed Innovations 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 Seed Innovations will offset losses from the drop in Seed Innovations' long position.| Abingdon Health vs. Axfood AB | Abingdon Health vs. Mobile Tornado Group | Abingdon Health vs. United Utilities Group | Abingdon Health vs. Grieg Seafood |
| Seed Innovations vs. Ameriprise Financial | Seed Innovations vs. Commerzbank AG | Seed Innovations vs. Raymond James Financial | Seed Innovations vs. JD Sports Fashion |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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