Can any of the company-specific risk be diversified away by investing in both ASX and Abcam Plc 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 ASX and Abcam Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASX Limited and Abcam plc, you can compare the effects of market volatilities on ASX and Abcam Plc 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 ASX with a short position of Abcam Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASX and Abcam Plc.
Diversification Opportunities for ASX and Abcam Plc
The 3 months correlation between ASX and Abcam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ASX Limited and Abcam plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abcam plc and ASX 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 ASX Limited are associated (or correlated) with Abcam Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abcam plc has no effect on the direction of ASX i.e., ASX and Abcam Plc go up and down completely randomly.
If you would invest 4,100 in ASX Limited on March 6, 2024 and sell it today you would earn a total of 43.00 from holding ASX Limited or generate 1.05% return on investment over 90 days.
Over the last 90 days ASX Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.