Correlation Between AbbVie and Satcom Systems
Can any of the company-specific risk be diversified away by investing in both AbbVie and Satcom Systems 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 AbbVie and Satcom Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AbbVie Inc and Satcom Systems, you can compare the effects of market volatilities on AbbVie and Satcom Systems 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 AbbVie with a short position of Satcom Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Satcom Systems.
Diversification Opportunities for AbbVie and Satcom Systems
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between AbbVie and Satcom is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Satcom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Satcom Systems and AbbVie 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 AbbVie Inc are associated (or correlated) with Satcom Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Satcom Systems has no effect on the direction of AbbVie i.e., AbbVie and Satcom Systems go up and down completely randomly.
Pair Corralation between AbbVie and Satcom Systems
Given the investment horizon of 90 days AbbVie Inc is expected to under-perform the Satcom Systems. But the stock apears to be less risky and, when comparing its historical volatility, AbbVie Inc is 4.83 times less risky than Satcom Systems. The stock trades about -0.09 of its potential returns per unit of risk. The Satcom Systems is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,190 in Satcom Systems on January 24, 2024 and sell it today you would earn a total of 2,410 from holding Satcom Systems or generate 57.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
AbbVie Inc vs. Satcom Systems
Performance |
| Timeline |
| AbbVie Inc |
| Satcom Systems |
AbbVie and Satcom Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AbbVie and Satcom Systems
The main advantage of trading using opposite AbbVie and Satcom Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AbbVie position performs unexpectedly, Satcom Systems 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 Satcom Systems will offset losses from the drop in Satcom Systems' long position.| AbbVie vs. Merck Company | AbbVie vs. Pfizer Inc | AbbVie vs. Eli Lilly and | AbbVie vs. Bristol Myers Squibb |
| Satcom Systems vs. Bank Leumi Le Israel | Satcom Systems vs. Teva Pharmaceutical Industries | Satcom Systems vs. Bank Hapoalim | Satcom Systems vs. Elbit Systems |
Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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