Correlation Between ABIVAX Socit and Park Electrochemical

Can any of the company-specific risk be diversified away by investing in both ABIVAX Socit and Park Electrochemical 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 ABIVAX Socit and Park Electrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABIVAX Socit Anonyme and Park Electrochemical, you can compare the effects of market volatilities on ABIVAX Socit and Park Electrochemical 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 ABIVAX Socit with a short position of Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABIVAX Socit and Park Electrochemical.

Diversification Opportunities for ABIVAX Socit and Park Electrochemical

0.2

Correlation Coefficient

ABIVAX Socit  Park Electrochemical

Modest diversification

The 3 months correlation between ABIVAX and Park is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding ABIVAX Socit Anonyme and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical and ABIVAX Socit 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 ABIVAX Socit Anonyme are associated (or correlated) with Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of ABIVAX Socit i.e., ABIVAX Socit and Park Electrochemical go up and down completely randomly.

Pair Corralation between ABIVAX Socit and Park Electrochemical

Assuming the 90 days horizon ABIVAX Socit Anonyme is expected to generate 2.0 times more return on investment than Park Electrochemical. However, ABIVAX Socit is 2.0 times more volatile than Park Electrochemical. It trades about -0.02 of its potential returns per unit of risk. Park Electrochemical is currently generating about -0.06 per unit of risk. If you would invest  737.00  in ABIVAX Socit Anonyme on December 29, 2024 and sell it today you would lose (46.00) from holding ABIVAX Socit Anonyme or give up 6.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

ABIVAX Socit Anonyme  vs.  Park Electrochemical

ABIVAX Socit Anonyme

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABIVAX Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABIVAX Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Park Electrochemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Electrochemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Park Electrochemical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ABIVAX Socit and Park Electrochemical

The main advantage of trading using opposite ABIVAX Socit and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABIVAX Socit position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.

The idea behind ABIVAX Socit Anonyme and Park Electrochemical 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.