Correlation Between Dentsply Sirona and Abingdon Health

Can any of the company-specific risk be diversified away by investing in both Dentsply Sirona 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 Dentsply Sirona and Abingdon Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dentsply Sirona and Abingdon Health Plc, you can compare the effects of market volatilities on Dentsply Sirona 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 Dentsply Sirona with a short position of Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dentsply Sirona and Abingdon Health.

Diversification Opportunities for Dentsply Sirona and Abingdon Health

0.29

Correlation Coefficient

Dentsply Sirona  Abingdon Health

Modest diversification

The 3 months correlation between Dentsply and Abingdon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona 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 Dentsply Sirona i.e., Dentsply Sirona and Abingdon Health go up and down completely randomly.

Pair Corralation between Dentsply Sirona and Abingdon Health

Assuming the 90 days trading horizon Dentsply Sirona is expected to under-perform the Abingdon Health. But the stock apears to be less risky and, when comparing its historical volatility, Dentsply Sirona is 1.73 times less risky than Abingdon Health. The stock trades about -0.02 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  700.00  in Abingdon Health Plc on November 29, 2024 and sell it today you would earn a total of  25.00  from holding Abingdon Health Plc or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Dentsply Sirona  vs.  Abingdon Health Plc

Dentsply Sirona

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dentsply Sirona has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dentsply Sirona is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Abingdon Health Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Abingdon Health Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Abingdon Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dentsply Sirona and Abingdon Health

The main advantage of trading using opposite Dentsply Sirona and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dentsply Sirona 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.

The idea behind Dentsply Sirona and Abingdon Health 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.

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.