Correlation Between CareCloud and AbbVie

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

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

Diversification Opportunities for CareCloud and AbbVie

0.28

Correlation Coefficient

CareCloud  AbbVie

Modest diversification

The 3 months correlation between CareCloud and AbbVie is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding CareCloud and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc and CareCloud 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 CareCloud are associated (or correlated) with AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of CareCloud i.e., CareCloud and AbbVie go up and down completely randomly.

Pair Corralation between CareCloud and AbbVie

Assuming the 90 days horizon CareCloud is expected to generate 1.69 times less return on investment than AbbVie. In addition to that, CareCloud is 1.46 times more volatile than AbbVie Inc. It trades about 0.09 of its total potential returns per unit of risk. AbbVie Inc is currently generating about 0.23 per unit of volatility. If you would invest  17,672  in AbbVie Inc on December 21, 2024 and sell it today you would earn a total of  3,329  from holding AbbVie Inc or generate 18.84% return on investment over 90 days.

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

CareCloud  vs.  AbbVie Inc

CareCloud

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, CareCloud may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AbbVie Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AbbVie Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental drivers, AbbVie showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CareCloud and AbbVie

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

The idea behind CareCloud and AbbVie Inc 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.