Correlation Between Abingdon Health and Seed Innovations

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

Diversification Opportunities for Abingdon Health and Seed Innovations

0.34

Correlation Coefficient

Abingdon Health  Seed Innovations

Weak diversification

The 3 months correlation between Abingdon and Seed is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Seed Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seed Innovations 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 Seed Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seed Innovations has no effect on the direction of Abingdon Health i.e., Abingdon Health and Seed Innovations go up and down completely randomly.

Pair Corralation between Abingdon Health and Seed Innovations

Assuming the 90 days trading horizon Abingdon Health Plc is expected to under-perform the Seed Innovations. In addition to that, Abingdon Health is 1.2 times more volatile than Seed Innovations. It trades about -0.02 of its total potential returns per unit of risk. Seed Innovations is currently generating about 0.03 per unit of volatility. If you would invest  151.00  in Seed Innovations on October 26, 2024 and sell it today you would earn a total of  19.00  from holding Seed Innovations or generate 12.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Abingdon Health Plc  vs.  Seed Innovations

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 comparatively stable basic indicators, Abingdon Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Seed Innovations

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seed Innovations are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Seed Innovations unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abingdon Health and Seed Innovations

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

The idea behind Abingdon Health Plc and Seed Innovations 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.

Check out your portfolio center.

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 Channel module to use Commodity Channel Index to analyze current equity momentum.