Correlation Between ABM Industries and Odyssey Marine

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

By analyzing existing cross correlation between ABM Industries Incorporated and Odyssey Marine Exploration, you can compare the effects of market volatilities on ABM Industries and Odyssey Marine 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 ABM Industries with a short position of Odyssey Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM Industries and Odyssey Marine.

Diversification Opportunities for ABM Industries and Odyssey Marine

-0.55

Correlation Coefficient

ABM Industries  Odyssey Marine

Excellent diversification

The 3 months correlation between ABM and Odyssey is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding ABM Industries Incorporated and Odyssey Marine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Marine Explo and ABM Industries 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 ABM Industries Incorporated are associated (or correlated) with Odyssey Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Marine Explo has no effect on the direction of ABM Industries i.e., ABM Industries and Odyssey Marine go up and down completely randomly.

Pair Corralation between ABM Industries and Odyssey Marine

Considering the 90-day investment horizon ABM Industries Incorporated is expected to generate 0.05 times more return on investment than Odyssey Marine. However, ABM Industries Incorporated is 18.77 times less risky than Odyssey Marine. It trades about 0.16 of its potential returns per unit of risk. Odyssey Marine Exploration is currently generating about 0.0 per unit of risk. If you would invest  4,913  in ABM Industries Incorporated on September 12, 2024 and sell it today you would earn a total of  775.00  from holding ABM Industries Incorporated or generate 15.77% return on investment over 90 days.

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

ABM Industries Incorporated  vs.  Odyssey Marine Exploration

ABM Industries

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABM Industries Incorporated are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental drivers, ABM Industries displayed solid returns over the last few months and may actually be approaching a breakup point.

Odyssey Marine Explo

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Odyssey Marine Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Odyssey Marine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ABM Industries and Odyssey Marine

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

The idea behind ABM Industries Incorporated and Odyssey Marine Exploration 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..