Correlation Between Ibio and Abeona Therapeutics

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

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

Diversification Opportunities for Ibio and Abeona Therapeutics

0.86

Correlation Coefficient

Ibio  Abeona Therapeutics

Very poor diversification

The 3 months correlation between Ibio and Abeona is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ibio Inc and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Ibio 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 Ibio Inc are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Ibio i.e., Ibio and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Ibio and Abeona Therapeutics

Given the investment horizon of 90 days Ibio Inc is expected to under-perform the Abeona Therapeutics. In addition to that, Ibio is 2.02 times more volatile than Abeona Therapeutics. It trades about -0.02 of its total potential returns per unit of risk. Abeona Therapeutics is currently generating about 0.02 per unit of volatility. If you would invest  636.00  in Abeona Therapeutics on August 31, 2024 and sell it today you would earn a total of  2.00  from holding Abeona Therapeutics or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Ibio Inc  vs.  Abeona Therapeutics

Ibio Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ibio Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Ibio displayed solid returns over the last few months and may actually be approaching a breakup point.

Abeona Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Abeona Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, Abeona Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ibio and Abeona Therapeutics

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

The idea behind Ibio Inc and Abeona Therapeutics 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 Anywhere module to track or share privately all of your investments from the convenience of any device.