Correlation Between AbL Diagnostics and Ecomiam SA

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Can any of the company-specific risk be diversified away by investing in both AbL Diagnostics and Ecomiam SA 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 AbL Diagnostics and Ecomiam SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbL Diagnostics SA and Ecomiam SA, you can compare the effects of market volatilities on AbL Diagnostics and Ecomiam SA 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 AbL Diagnostics with a short position of Ecomiam SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbL Diagnostics and Ecomiam SA.

Diversification Opportunities for AbL Diagnostics and Ecomiam SA

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AbL and Ecomiam is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding AbL Diagnostics SA and Ecomiam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecomiam SA and AbL Diagnostics 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 AbL Diagnostics SA are associated (or correlated) with Ecomiam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecomiam SA has no effect on the direction of AbL Diagnostics i.e., AbL Diagnostics and Ecomiam SA go up and down completely randomly.

Pair Corralation between AbL Diagnostics and Ecomiam SA

Assuming the 90 days trading horizon AbL Diagnostics SA is expected to under-perform the Ecomiam SA. But the stock apears to be less risky and, when comparing its historical volatility, AbL Diagnostics SA is 1.0 times less risky than Ecomiam SA. The stock trades about -0.05 of its potential returns per unit of risk. The Ecomiam SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  480.00  in Ecomiam SA on August 27, 2024 and sell it today you would lose (237.00) from holding Ecomiam SA or give up 49.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy94.46%
ValuesDaily Returns

AbL Diagnostics SA  vs.  Ecomiam SA

 Performance 
       Timeline  
AbL Diagnostics SA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AbL Diagnostics SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AbL Diagnostics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Ecomiam SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ecomiam SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

AbL Diagnostics and Ecomiam SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AbL Diagnostics and Ecomiam SA

The main advantage of trading using opposite AbL Diagnostics and Ecomiam SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbL Diagnostics position performs unexpectedly, Ecomiam SA 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 Ecomiam SA will offset losses from the drop in Ecomiam SA's long position.
The idea behind AbL Diagnostics SA and Ecomiam SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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