Correlation Between Nanobiotix and AB Science
Can any of the company-specific risk be diversified away by investing in both Nanobiotix and AB Science 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 Nanobiotix and AB Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanobiotix SA and AB Science SA, you can compare the effects of market volatilities on Nanobiotix and AB Science 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 Nanobiotix with a short position of AB Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanobiotix and AB Science.
Diversification Opportunities for Nanobiotix and AB Science
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanobiotix and AB Science is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nanobiotix SA and AB Science SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Science SA and Nanobiotix 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 Nanobiotix SA are associated (or correlated) with AB Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Science SA has no effect on the direction of Nanobiotix i.e., Nanobiotix and AB Science go up and down completely randomly.
Pair Corralation between Nanobiotix and AB Science
Assuming the 90 days trading horizon Nanobiotix SA is expected to under-perform the AB Science. In addition to that, Nanobiotix is 1.06 times more volatile than AB Science SA. It trades about -0.45 of its total potential returns per unit of risk. AB Science SA is currently generating about -0.41 per unit of volatility. If you would invest 96.00 in AB Science SA on August 27, 2024 and sell it today you would lose (17.00) from holding AB Science SA or give up 17.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanobiotix SA vs. AB Science SA
Performance |
| Timeline |
| Nanobiotix SA |
| AB Science SA |
Nanobiotix and AB Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanobiotix and AB Science
The main advantage of trading using opposite Nanobiotix and AB Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanobiotix position performs unexpectedly, AB Science 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 AB Science will offset losses from the drop in AB Science's long position.The idea behind Nanobiotix SA and AB Science 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.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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