Correlation Between ADS TEC and ABB

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

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

Diversification Opportunities for ADS TEC and ABB

-0.03

Correlation Coefficient

ADS TEC  ABB

Good diversification

The 3 months correlation between ADS and ABB is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding ADS TEC ENERGY PLC and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB and ADS TEC 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 ADS TEC ENERGY PLC are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of ADS TEC i.e., ADS TEC and ABB go up and down completely randomly.

Pair Corralation between ADS TEC and ABB

Assuming the 90 days horizon ADS TEC ENERGY PLC is expected to generate 41.78 times more return on investment than ABB. However, ADS TEC is 41.78 times more volatile than ABB. It trades about 0.12 of its potential returns per unit of risk. ABB is currently generating about 0.0 per unit of risk. If you would invest  212.00  in ADS TEC ENERGY PLC on August 31, 2024 and sell it today you would earn a total of  110.00  from holding ADS TEC ENERGY PLC or generate 51.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

ADS TEC ENERGY PLC  vs.  ABB

ADS TEC ENERGY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADS TEC ENERGY PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, ADS TEC showed solid returns over the last few months and may actually be approaching a breakup point.

ABB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABB has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with ADS TEC and ABB

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

The idea behind ADS TEC ENERGY PLC and ABB 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.