Correlation Between ABB PAR and Halma Plc
Can any of the company-specific risk be diversified away by investing in both ABB PAR and Halma Plc 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 ABB PAR and Halma Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABB PAR AB and Halma plc, you can compare the effects of market volatilities on ABB PAR and Halma Plc 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 ABB PAR with a short position of Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB PAR and Halma Plc.
Diversification Opportunities for ABB PAR and Halma Plc
Good diversification
The 3 months correlation between ABB and Halma is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ABB PAR AB and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc and ABB PAR 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 ABB PAR AB are associated (or correlated) with Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of ABB PAR i.e., ABB PAR and Halma Plc go up and down completely randomly.
Pair Corralation between ABB PAR and Halma Plc
Assuming the 90 days horizon ABB PAR AB is expected to under-perform the Halma Plc. But the stock apears to be less risky and, when comparing its historical volatility, ABB PAR AB is 1.37 times less risky than Halma Plc. The stock trades about -0.16 of its potential returns per unit of risk. The Halma plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,239 in Halma plc on September 28, 2024 and sell it today you would earn a total of 39.00 from holding Halma plc or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABB PAR AB vs. Halma plc
Performance |
| Timeline |
| ABB PAR AB |
| Halma plc |
ABB PAR and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABB PAR and Halma Plc
The main advantage of trading using opposite ABB PAR and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABB PAR position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.The idea behind ABB PAR AB and Halma plc 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.| Halma Plc vs. ABB PAR AB | Halma Plc vs. ASSA ABLOY AB | Halma Plc vs. SECOM LTD | Halma Plc vs. Allegion plc |
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 CEOs Directory module to screen CEOs from public companies around the world.
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