Correlation Between Abcam Plc and ASX

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

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

Diversification Opportunities for Abcam Plc and ASX

0.0

Correlation Coefficient

Abcam Plc  ASX

Pay attention - limited upside

The 3 months correlation between Abcam and ASX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abcam plc and ASX Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX Limited and Abcam Plc 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 Abcam plc are associated (or correlated) with ASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX Limited has no effect on the direction of Abcam Plc i.e., Abcam Plc and ASX go up and down completely randomly.

Pair Corralation between Abcam Plc and ASX

Assuming the 90 days horizon Abcam plc is expected to generate 6.93 times more return on investment than ASX. However, Abcam Plc is 6.93 times more volatile than ASX Limited. It trades about 0.04 of its potential returns per unit of risk. ASX Limited is currently generating about -0.01 per unit of risk. If you would invest  1,446  in Abcam plc on February 23, 2024 and sell it today you would earn a total of  779.00  from holding Abcam plc or generate 53.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.15%
Values	Daily Returns

Abcam plc  vs.  ASX Limited

Abcam plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abcam plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Abcam Plc is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

ASX Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ASX Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, ASX is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Abcam Plc and ASX

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

The idea behind Abcam plc and ASX Limited 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.