Correlation Between AbbVie and Ainos

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

By analyzing existing cross correlation between AbbVie Inc and Ainos Inc, you can compare the effects of market volatilities on AbbVie and Ainos 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 Ainos. Check out your portfolio center. Please also check ongoing floating volatility patterns of AbbVie and Ainos.

Diversification Opportunities for AbbVie and Ainos

0.5

Correlation Coefficient

AbbVie  Ainos

Very weak diversification

The 3 months correlation between AbbVie and Ainos is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AbbVie Inc and Ainos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainos Inc 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 Ainos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainos Inc has no effect on the direction of AbbVie i.e., AbbVie and Ainos go up and down completely randomly.

Pair Corralation between AbbVie and Ainos

Given the investment horizon of 90 days AbbVie Inc is expected to under-perform the Ainos. But the stock apears to be less risky and, when comparing its historical volatility, AbbVie Inc is 19.02 times less risky than Ainos. The stock trades about -0.04 of its potential returns per unit of risk. The Ainos Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7.99  in Ainos Inc on March 13, 2024 and sell it today you would lose (3.47) from holding Ainos Inc or give up 43.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	48.39%
Values	Daily Returns

AbbVie Inc  vs.  Ainos Inc

AbbVie Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AbbVie Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, AbbVie is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ainos Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Ainos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal fundamental indicators, Ainos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AbbVie and Ainos

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

The idea behind AbbVie Inc and Ainos Inc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.