Correlation Between Abbott Laboratories and GN Store

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

By analyzing existing cross correlation between Abbott Laboratories and GN Store Nord, you can compare the effects of market volatilities on Abbott Laboratories and GN Store 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 Abbott Laboratories with a short position of GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and GN Store.

Diversification Opportunities for Abbott Laboratories and GN Store

0.32

Correlation Coefficient

Abbott Laboratories  GN Store

Weak diversification

The 3 months correlation between Abbott and GGNDF is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord and Abbott Laboratories 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 Abbott Laboratories are associated (or correlated) with GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and GN Store go up and down completely randomly.

Pair Corralation between Abbott Laboratories and GN Store

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.53 times more return on investment than GN Store. However, Abbott Laboratories is 1.9 times less risky than GN Store. It trades about 0.23 of its potential returns per unit of risk. GN Store Nord is currently generating about 0.06 per unit of risk. If you would invest  11,620  in Abbott Laboratories on December 2, 2024 and sell it today you would earn a total of  2,181  from holding Abbott Laboratories or generate 18.77% return on investment over 90 days.

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

Abbott Laboratories  vs.  GN Store Nord

Abbott Laboratories

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental drivers, Abbott Laboratories unveiled solid returns over the last few months and may actually be approaching a breakup point.

GN Store Nord

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GN Store Nord are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, GN Store may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Abbott Laboratories and GN Store

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

The idea behind Abbott Laboratories and GN Store Nord 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.