Correlation Between ABB and Tantalus Systems

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

By analyzing existing cross correlation between ABB and Tantalus Systems Holding, you can compare the effects of market volatilities on ABB and Tantalus Systems 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 ABB with a short position of Tantalus Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABB and Tantalus Systems.

Diversification Opportunities for ABB and Tantalus Systems

-0.14

Correlation Coefficient

ABB  Tantalus Systems

Good diversification

The 3 months correlation between ABB and Tantalus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ABB and Tantalus Systems Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tantalus Systems Holding and ABB 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 ABB are associated (or correlated) with Tantalus Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tantalus Systems Holding has no effect on the direction of ABB i.e., ABB and Tantalus Systems go up and down completely randomly.

Pair Corralation between ABB and Tantalus Systems

Assuming the 90 days horizon ABB is expected to generate 2.55 times less return on investment than Tantalus Systems. But when comparing it to its historical volatility, ABB is 1.9 times less risky than Tantalus Systems. It trades about 0.07 of its potential returns per unit of risk. Tantalus Systems Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Tantalus Systems Holding on September 4, 2024 and sell it today you would earn a total of  70.00  from holding Tantalus Systems Holding or generate 122.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

ABB  vs.  Tantalus Systems Holding

ABB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ABB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ABB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tantalus Systems Holding

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tantalus Systems Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Tantalus Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ABB and Tantalus Systems

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

The idea behind ABB and Tantalus Systems Holding 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.