Correlation Between Abcam PLC and Gain Therapeutics

Can any of the company-specific risk be diversified away by investing in both Abcam PLC and Gain Therapeutics 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 Abcam PLC and Gain Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Abcam PLC and Gain Therapeutics, you can compare the effects of market volatilities on Abcam PLC and Gain Therapeutics 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 Abcam PLC with a short position of Gain Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abcam PLC and Gain Therapeutics.

Diversification Opportunities for Abcam PLC and Gain Therapeutics

0.0

Correlation Coefficient

Abcam PLC  Gain Therapeutics

Pay attention - limited upside

The 3 months correlation between Abcam and Gain is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abcam PLC and Gain Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gain Therapeutics and Abcam PLC 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 Abcam PLC are associated (or correlated) with Gain Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gain Therapeutics has no effect on the direction of Abcam PLC i.e., Abcam PLC and Gain Therapeutics go up and down completely randomly.

Pair Corralation between Abcam PLC and Gain Therapeutics

If you would invest  176.00  in Gain Therapeutics on December 27, 2024 and sell it today you would earn a total of  28.00  from holding Gain Therapeutics or generate 15.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Abcam PLC  vs.  Gain Therapeutics

Abcam PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abcam PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Abcam PLC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Gain Therapeutics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gain Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Gain Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abcam PLC and Gain Therapeutics

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

The idea behind Abcam PLC and Gain Therapeutics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.