Correlation Between Abingdon Health and Molson Coors

Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Molson Coors 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 Molson Coors 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 Molson Coors Beverage, you can compare the effects of market volatilities on Abingdon Health and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Molson Coors.

Diversification Opportunities for Abingdon Health and Molson Coors

-0.56

Correlation Coefficient

Abingdon Health  Molson Coors

Excellent diversification

The 3 months correlation between Abingdon and Molson is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Abingdon Health i.e., Abingdon Health and Molson Coors go up and down completely randomly.

Pair Corralation between Abingdon Health and Molson Coors

Assuming the 90 days trading horizon Abingdon Health Plc is expected to generate 1.77 times more return on investment than Molson Coors. However, Abingdon Health is 1.77 times more volatile than Molson Coors Beverage. It trades about 0.04 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.0 per unit of risk. If you would invest  825.00  in Abingdon Health Plc on October 25, 2024 and sell it today you would earn a total of  43.00  from holding Abingdon Health Plc or generate 5.21% return on investment over 90 days.

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

Abingdon Health Plc  vs.  Molson Coors Beverage

Abingdon Health Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Abingdon Health Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Abingdon Health may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Molson Coors Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Molson Coors Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Molson Coors 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 Abingdon Health and Molson Coors

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

The idea behind Abingdon Health Plc and Molson Coors Beverage 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.