Correlation Between Aban Offshore and PPJ Healthcare

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Can any of the company-specific risk be diversified away by investing in both Aban Offshore and PPJ Healthcare 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 Aban Offshore and PPJ Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aban Offshore Limited and PPJ Healthcare Enterprises, you can compare the effects of market volatilities on Aban Offshore and PPJ Healthcare 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 Aban Offshore with a short position of PPJ Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aban Offshore and PPJ Healthcare.

Diversification Opportunities for Aban Offshore and PPJ Healthcare

0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Aban and PPJ is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aban Offshore Limited and PPJ Healthcare Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPJ Healthcare Enter and Aban Offshore 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 Aban Offshore Limited are associated (or correlated) with PPJ Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPJ Healthcare Enter has no effect on the direction of Aban Offshore i.e., Aban Offshore and PPJ Healthcare go up and down completely randomly.

Pair Corralation between Aban Offshore and PPJ Healthcare

Assuming the 90 days trading horizon Aban Offshore Limited is expected to under-perform the PPJ Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Aban Offshore Limited is 5.59 times less risky than PPJ Healthcare. The stock trades about -0.61 of its potential returns per unit of risk. The PPJ Healthcare Enterprises is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.03  in PPJ Healthcare Enterprises on December 29, 2023 and sell it today you would lose (0.01) from holding PPJ Healthcare Enterprises or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy91.3%
ValuesDaily Returns

Aban Offshore Limited  vs.  PPJ Healthcare Enterprises

 Performance 
       Timeline  
Aban Offshore Limited 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aban Offshore is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
PPJ Healthcare Enter 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PPJ Healthcare Enterprises are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking indicators, PPJ Healthcare exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aban Offshore and PPJ Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aban Offshore and PPJ Healthcare

The main advantage of trading using opposite Aban Offshore and PPJ Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aban Offshore position performs unexpectedly, PPJ Healthcare 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 PPJ Healthcare will offset losses from the drop in PPJ Healthcare's long position.
The idea behind Aban Offshore Limited and PPJ Healthcare Enterprises 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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