Correlation Between ILIKA PLC and Abb

By analyzing existing cross correlation between ILIKA PLC and Abb Ltd ADR, you can compare the effects of market volatilities on ILIKA PLC and Abb 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 ILIKA PLC with a short position of Abb. Check out your portfolio center. Please also check ongoing floating volatility patterns of ILIKA PLC and Abb.

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

Diversification Opportunities for ILIKA PLC and Abb

0.74
  Correlation Coefficient
ILIKA PLC
Abb Ltd ADR

Poor diversification

The 3 months correlation between ILIKA and Abb is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ILIKA PLC and Abb Ltd ADR in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Abb Ltd ADR and ILIKA 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 ILIKA PLC are associated (or correlated) with Abb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abb Ltd ADR has no effect on the direction of ILIKA PLC i.e., ILIKA PLC and Abb go up and down completely randomly.

Pair Corralation between ILIKA PLC and Abb

Assuming the 90 days horizon ILIKA PLC is expected to under-perform the Abb. In addition to that, ILIKA PLC is 3.48 times more volatile than Abb Ltd ADR. It trades about -0.04 of its total potential returns per unit of risk. Abb Ltd ADR is currently generating about 0.05 per unit of volatility. If you would invest  3,132  in Abb Ltd ADR on August 30, 2021 and sell it today you would earn a total of  287.00  from holding Abb Ltd ADR or generate 9.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

ILIKA PLC  vs.  Abb Ltd ADR

 Performance (%) 
      Timeline 
ILIKA PLC 
ILIKA Performance
0 of 100
Over the last 90 days ILIKA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, ILIKA PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ILIKA Price Channel

Abb Ltd ADR 
Abb Performance
0 of 100
Over the last 90 days Abb Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Abb Price Channel

ILIKA PLC and Abb Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with ILIKA PLC and Abb

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

ILIKA PLC

Pair trading matchups for ILIKA PLC

The idea behind ILIKA PLC and Abb Ltd ADR 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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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