Correlation Between Berkshire Hathaway and Abacus Mining

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

By analyzing existing cross correlation between Berkshire Hathaway and Abacus Mining Exploration, you can compare the effects of market volatilities on Berkshire Hathaway and Abacus Mining 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 Berkshire Hathaway with a short position of Abacus Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Abacus Mining.

Diversification Opportunities for Berkshire Hathaway and Abacus Mining

0.45

Correlation Coefficient

Berkshire Hathaway  Abacus Mining

Very weak diversification

The 3 months correlation between Berkshire and Abacus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Abacus Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Mining Exploration and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Abacus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Mining Exploration has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Abacus Mining go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Abacus Mining

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 127.81 times less return on investment than Abacus Mining. But when comparing it to its historical volatility, Berkshire Hathaway is 42.14 times less risky than Abacus Mining. It trades about 0.04 of its potential returns per unit of risk. Abacus Mining Exploration is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Abacus Mining Exploration on November 19, 2024 and sell it today you would lose (1.00) from holding Abacus Mining Exploration or give up 50.0% of portfolio value over 90 days.

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

Berkshire Hathaway  vs.  Abacus Mining Exploration

Berkshire Hathaway

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Abacus Mining Exploration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abacus Mining Exploration are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Abacus Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Abacus Mining

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

The idea behind Berkshire Hathaway and Abacus Mining 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..