Correlation Between Abingdon Health and Trellus Health
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Trellus Health 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 Trellus Health 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 Trellus Health plc, you can compare the effects of market volatilities on Abingdon Health and Trellus Health 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 Trellus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Trellus Health.
Diversification Opportunities for Abingdon Health and Trellus Health
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Abingdon and Trellus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Trellus Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellus Health 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 Trellus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellus Health plc has no effect on the direction of Abingdon Health i.e., Abingdon Health and Trellus Health go up and down completely randomly.
Pair Corralation between Abingdon Health and Trellus Health
Assuming the 90 days trading horizon Abingdon Health is expected to generate 204.11 times less return on investment than Trellus Health. But when comparing it to its historical volatility, Abingdon Health Plc is 129.56 times less risky than Trellus Health. It trades about 0.14 of its potential returns per unit of risk. Trellus Health plc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 57.00 in Trellus Health plc on October 24, 2024 and sell it today you would earn a total of 203.00 from holding Trellus Health plc or generate 356.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abingdon Health Plc vs. Trellus Health plc
Performance |
| Timeline |
| Abingdon Health Plc |
| Trellus Health plc |
Abingdon Health and Trellus Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abingdon Health and Trellus Health
The main advantage of trading using opposite Abingdon Health and Trellus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Trellus Health 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 Trellus Health will offset losses from the drop in Trellus Health's long position.| Abingdon Health vs. Cornish Metals | Abingdon Health vs. Elmos Semiconductor SE | Abingdon Health vs. URU Metals | Abingdon Health vs. Indutrade AB |
| Trellus Health vs. Live Nation Entertainment | Trellus Health vs. MoneysupermarketCom Group PLC | Trellus Health vs. Associated British Foods | Trellus Health vs. Molson Coors Beverage |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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