Correlation Between Abingdon Health and Sabien Technology
Can any of the company-specific risk be diversified away by investing in both Abingdon Health and Sabien Technology 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 Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on Abingdon Health and Sabien Technology 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 Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abingdon Health and Sabien Technology.
Diversification Opportunities for Abingdon Health and Sabien Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Abingdon and Sabien is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Abingdon Health Plc and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Abingdon Health i.e., Abingdon Health and Sabien Technology go up and down completely randomly.
Pair Corralation between Abingdon Health and Sabien Technology
Assuming the 90 days trading horizon Abingdon Health Plc is expected to under-perform the Sabien Technology. But the stock apears to be less risky and, when comparing its historical volatility, Abingdon Health Plc is 1.46 times less risky than Sabien Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Sabien Technology Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Sabien Technology Group on October 7, 2024 and sell it today you would earn a total of 75.00 from holding Sabien Technology Group or generate 6.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Abingdon Health Plc vs. Sabien Technology Group
Performance |
Timeline |
Abingdon Health Plc |
Sabien Technology |
Abingdon Health and Sabien Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Abingdon Health and Sabien Technology
The main advantage of trading using opposite Abingdon Health and Sabien Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abingdon Health position performs unexpectedly, Sabien Technology 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 Sabien Technology will offset losses from the drop in Sabien Technology's long position.Abingdon Health vs. Samsung Electronics Co | Abingdon Health vs. Samsung Electronics Co | Abingdon Health vs. Toyota Motor Corp | Abingdon Health vs. Reliance Industries Ltd |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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