Correlation Between LIBERTY DEFENSE and ABB PAR
Can any of the company-specific risk be diversified away by investing in both LIBERTY DEFENSE and ABB PAR 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 LIBERTY DEFENSE and ABB PAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIBERTY DEFENSE H and ABB PAR AB, you can compare the effects of market volatilities on LIBERTY DEFENSE and ABB PAR 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 LIBERTY DEFENSE with a short position of ABB PAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIBERTY DEFENSE and ABB PAR.
Diversification Opportunities for LIBERTY DEFENSE and ABB PAR
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LIBERTY and ABB is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding LIBERTY DEFENSE H and ABB PAR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB PAR AB and LIBERTY DEFENSE 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 LIBERTY DEFENSE H are associated (or correlated) with ABB PAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB PAR AB has no effect on the direction of LIBERTY DEFENSE i.e., LIBERTY DEFENSE and ABB PAR go up and down completely randomly.
Pair Corralation between LIBERTY DEFENSE and ABB PAR
Assuming the 90 days trading horizon LIBERTY DEFENSE H is expected to generate 2.97 times more return on investment than ABB PAR. However, LIBERTY DEFENSE is 2.97 times more volatile than ABB PAR AB. It trades about 0.63 of its potential returns per unit of risk. ABB PAR AB is currently generating about 0.08 per unit of risk. If you would invest 54.00 in LIBERTY DEFENSE H on November 8, 2024 and sell it today you would earn a total of 36.00 from holding LIBERTY DEFENSE H or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.18% |
| Values | Daily Returns |
LIBERTY DEFENSE H vs. ABB PAR AB
Performance |
| Timeline |
| LIBERTY DEFENSE H |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| ABB PAR AB |
LIBERTY DEFENSE and ABB PAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIBERTY DEFENSE and ABB PAR
The main advantage of trading using opposite LIBERTY DEFENSE and ABB PAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIBERTY DEFENSE position performs unexpectedly, ABB PAR 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 PAR will offset losses from the drop in ABB PAR's long position.| LIBERTY DEFENSE vs. UNICREDIT SPA ADR | LIBERTY DEFENSE vs. JSC Halyk bank | LIBERTY DEFENSE vs. De Grey Mining | LIBERTY DEFENSE vs. MAGNUM MINING EXP |
| ABB PAR vs. Take Two Interactive Software | ABB PAR vs. Genscript Biotech | ABB PAR vs. ATOSS SOFTWARE | ABB PAR vs. Sunny Optical Technology |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |