Correlation Between Abingdon Health and CVS Health

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

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

Diversification Opportunities for Abingdon Health and CVS Health

0.19

Correlation Coefficient

Abingdon Health  CVS Health

Average diversification

The 3 months correlation between Abingdon and CVS is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp and Abingdon Health 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 Abingdon Health Plc are associated (or correlated) with CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Abingdon Health i.e., Abingdon Health and CVS Health go up and down completely randomly.

Pair Corralation between Abingdon Health and CVS Health

Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 2.01 times more return on investment than CVS Health. However, Abingdon Health is 2.01 times more volatile than CVS Health Corp. It trades about 0.0 of its potential returns per unit of risk. CVS Health Corp is currently generating about 0.0 per unit of risk. If you would invest  1,000.00  in Abingdon Health Plc on September 1, 2024 and sell it today you would lose (300.00) from holding Abingdon Health Plc or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.47%
Values	Daily Returns

Abingdon Health Plc  vs.  CVS Health Corp

Abingdon Health Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abingdon Health Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CVS Health Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVS Health may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Abingdon Health and CVS Health

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

The idea behind Abingdon Health Plc and CVS Health Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.