Correlation Between Abbott Laboratories and Nu Med

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

By analyzing existing cross correlation between Abbott Laboratories and Nu Med Plus, you can compare the effects of market volatilities on Abbott Laboratories and Nu Med 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 Nu Med. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott Laboratories and Nu Med.

Diversification Opportunities for Abbott Laboratories and Nu Med

-0.31

Correlation Coefficient

Abbott Laboratories  Nu Med

Very good diversification

The 3 months correlation between Abbott and NUMD is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Abbott Laboratories and Nu Med Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nu Med Plus 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 Nu Med. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nu Med Plus has no effect on the direction of Abbott Laboratories i.e., Abbott Laboratories and Nu Med go up and down completely randomly.

Pair Corralation between Abbott Laboratories and Nu Med

Considering the 90-day investment horizon Abbott Laboratories is expected to generate 0.07 times more return on investment than Nu Med. However, Abbott Laboratories is 13.58 times less risky than Nu Med. It trades about -0.19 of its potential returns per unit of risk. Nu Med Plus is currently generating about -0.07 per unit of risk. If you would invest  11,776  in Abbott Laboratories on September 23, 2024 and sell it today you would lose (353.00) from holding Abbott Laboratories or give up 3.0% of portfolio value over 90 days.

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

Abbott Laboratories  vs.  Nu Med Plus

Abbott Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abbott Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Abbott Laboratories is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nu Med Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nu Med Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Abbott Laboratories and Nu Med

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

The idea behind Abbott Laboratories and Nu Med Plus 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.