Correlation Between HEMISPHERE EGY and Abbott Laboratories

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

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

Diversification Opportunities for HEMISPHERE EGY and Abbott Laboratories

0.03

Correlation Coefficient

HEMISPHERE EGY  Abbott Laboratories

Significant diversification

The 3 months correlation between HEMISPHERE and Abbott is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and Abbott Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbott Laboratories and HEMISPHERE EGY 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 HEMISPHERE EGY are associated (or correlated) with Abbott Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbott Laboratories has no effect on the direction of HEMISPHERE EGY i.e., HEMISPHERE EGY and Abbott Laboratories go up and down completely randomly.

Pair Corralation between HEMISPHERE EGY and Abbott Laboratories

Assuming the 90 days trading horizon HEMISPHERE EGY is expected to under-perform the Abbott Laboratories. But the stock apears to be less risky and, when comparing its historical volatility, HEMISPHERE EGY is 1.14 times less risky than Abbott Laboratories. The stock trades about -0.03 of its potential returns per unit of risk. The Abbott Laboratories is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  10,837  in Abbott Laboratories on December 23, 2024 and sell it today you would earn a total of  793.00  from holding Abbott Laboratories or generate 7.32% return on investment over 90 days.

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

HEMISPHERE EGY  vs.  Abbott Laboratories

HEMISPHERE EGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days HEMISPHERE EGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HEMISPHERE EGY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Abbott Laboratories

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott Laboratories are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Abbott Laboratories may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HEMISPHERE EGY and Abbott Laboratories

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

The idea behind HEMISPHERE EGY and Abbott Laboratories 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.