Correlation Between ABACUS STORAGE and Capitol Health

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

By analyzing existing cross correlation between ABACUS STORAGE KING and Capitol Health, you can compare the effects of market volatilities on ABACUS STORAGE and Capitol Health 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 ABACUS STORAGE with a short position of Capitol Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABACUS STORAGE and Capitol Health.

Diversification Opportunities for ABACUS STORAGE and Capitol Health

-0.37

Correlation Coefficient

ABACUS STORAGE  Capitol Health

Very good diversification

The 3 months correlation between ABACUS and Capitol is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ABACUS STORAGE KING and Capitol Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Health and ABACUS STORAGE 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 ABACUS STORAGE KING are associated (or correlated) with Capitol Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Health has no effect on the direction of ABACUS STORAGE i.e., ABACUS STORAGE and Capitol Health go up and down completely randomly.

Pair Corralation between ABACUS STORAGE and Capitol Health

Assuming the 90 days trading horizon ABACUS STORAGE KING is expected to generate 19.0 times more return on investment than Capitol Health. However, ABACUS STORAGE is 19.0 times more volatile than Capitol Health. It trades about 0.05 of its potential returns per unit of risk. Capitol Health is currently generating about 0.03 per unit of risk. If you would invest  128.00  in ABACUS STORAGE KING on September 26, 2024 and sell it today you would lose (9.00) from holding ABACUS STORAGE KING or give up 7.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.66%
Values	Daily Returns

ABACUS STORAGE KING  vs.  Capitol Health

ABACUS STORAGE KING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABACUS STORAGE KING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Capitol Health

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Health are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking indicators, Capitol Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ABACUS STORAGE and Capitol Health

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

The idea behind ABACUS STORAGE KING and Capitol Health 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.