Correlation Between Deltex Medical and Abingdon Health

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

By analyzing existing cross correlation between Deltex Medical Group and Abingdon Health Plc, you can compare the effects of market volatilities on Deltex Medical and Abingdon 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 Deltex Medical with a short position of Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deltex Medical and Abingdon Health.

Diversification Opportunities for Deltex Medical and Abingdon Health

0.87

Correlation Coefficient

Deltex Medical  Abingdon Health

Very poor diversification

The 3 months correlation between Deltex and Abingdon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Deltex Medical Group and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc and Deltex Medical 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 Deltex Medical Group are associated (or correlated) with Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of Deltex Medical i.e., Deltex Medical and Abingdon Health go up and down completely randomly.

Pair Corralation between Deltex Medical and Abingdon Health

Assuming the 90 days trading horizon Deltex Medical Group is expected to under-perform the Abingdon Health. But the stock apears to be less risky and, when comparing its historical volatility, Deltex Medical Group is 1.0 times less risky than Abingdon Health. The stock trades about -0.22 of its potential returns per unit of risk. The Abingdon Health Plc is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  930.00  in Abingdon Health Plc on September 18, 2024 and sell it today you would lose (205.00) from holding Abingdon Health Plc or give up 22.04% of portfolio value over 90 days.

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

Deltex Medical Group  vs.  Abingdon Health Plc

Deltex Medical Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deltex Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Abingdon Health Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abingdon Health Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Deltex Medical and Abingdon Health

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

The idea behind Deltex Medical Group and Abingdon Health Plc 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.