Correlation Between Abacus Life and Electrovaya Common

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

By analyzing existing cross correlation between Abacus Life and Electrovaya Common Shares, you can compare the effects of market volatilities on Abacus Life and Electrovaya Common 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 Abacus Life with a short position of Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abacus Life and Electrovaya Common.

Diversification Opportunities for Abacus Life and Electrovaya Common

-0.11

Correlation Coefficient

Abacus Life  Electrovaya Common

Good diversification

The 3 months correlation between Abacus and Electrovaya is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Abacus Life and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Abacus Life 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 Abacus Life are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Abacus Life i.e., Abacus Life and Electrovaya Common go up and down completely randomly.

Pair Corralation between Abacus Life and Electrovaya Common

Assuming the 90 days horizon Abacus Life is expected to generate 2.17 times more return on investment than Electrovaya Common. However, Abacus Life is 2.17 times more volatile than Electrovaya Common Shares. It trades about 0.09 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about -0.01 per unit of risk. If you would invest  28.00  in Abacus Life on August 31, 2024 and sell it today you would earn a total of  92.00  from holding Abacus Life or generate 328.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.92%
Values	Daily Returns

Abacus Life  vs.  Electrovaya Common Shares

Abacus Life

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abacus Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Abacus Life is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Electrovaya Common Shares

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abacus Life and Electrovaya Common

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

The idea behind Abacus Life and Electrovaya Common Shares 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.