Correlation Between Absolent Group and ABB
Can any of the company-specific risk be diversified away by investing in both Absolent Group and ABB 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 Absolent Group and ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolent Group AB and ABB, you can compare the effects of market volatilities on Absolent Group and ABB 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 Absolent Group with a short position of ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolent Group and ABB.
Diversification Opportunities for Absolent Group and ABB
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Absolent and ABB is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Absolent Group AB and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB and Absolent Group 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 Absolent Group AB are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of Absolent Group i.e., Absolent Group and ABB go up and down completely randomly.
Pair Corralation between Absolent Group and ABB
Assuming the 90 days trading horizon Absolent Group AB is expected to under-perform the ABB. In addition to that, Absolent Group is 1.68 times more volatile than ABB. It trades about -0.61 of its total potential returns per unit of risk. ABB is currently generating about 0.19 per unit of volatility. If you would invest 59,300 in ABB on September 1, 2024 and sell it today you would earn a total of 2,660 from holding ABB or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolent Group AB vs. ABB
Performance |
| Timeline |
| Absolent Group AB |
| ABB |
Absolent Group and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolent Group and ABB
The main advantage of trading using opposite Absolent Group and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolent Group position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| Absolent Group vs. AQ Group AB | Absolent Group vs. Troax Group AB | Absolent Group vs. Bufab Holding AB | Absolent Group vs. Beijer Ref AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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