Correlation Between European Metals and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both European Metals and Abingdon 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 European Metals and Abingdon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Abingdon Health Plc, you can compare the effects of market volatilities on European Metals and Abingdon 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 European Metals with a short position of Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Abingdon Health.
Diversification Opportunities for European Metals and Abingdon Health
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between European and Abingdon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc and European Metals 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 European Metals Holdings are associated (or correlated) with Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of European Metals i.e., European Metals and Abingdon Health go up and down completely randomly.
Pair Corralation between European Metals and Abingdon Health
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Abingdon Health. But the stock apears to be less risky and, when comparing its historical volatility, European Metals Holdings is 1.3 times less risky than Abingdon Health. The stock trades about -0.07 of its potential returns per unit of risk. The Abingdon Health Plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Abingdon Health Plc on September 20, 2024 and sell it today you would earn a total of 125.00 from holding Abingdon Health Plc or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Abingdon Health Plc
Performance |
| Timeline |
| European Metals Holdings |
| Abingdon Health Plc |
European Metals and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Abingdon Health
The main advantage of trading using opposite European Metals and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals position performs unexpectedly, Abingdon 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| European Metals vs. Waste Management | European Metals vs. Naturhouse Health SA | European Metals vs. Cardinal Health | European Metals vs. Planet Fitness Cl |
| Abingdon Health vs. Ross Stores | Abingdon Health vs. JD Sports Fashion | Abingdon Health vs. Hochschild Mining plc | Abingdon Health vs. European Metals Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |