Correlation Between Mustang Bio and AbcamPLC

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

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

Diversification Opportunities for Mustang Bio and AbcamPLC

-0.93

Correlation Coefficient

Mustang Bio  AbcamPLC

Pay attention - limited upside

The 3 months correlation between Mustang and AbcamPLC is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and AbcamPLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbcamPLC and Mustang Bio 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 Mustang Bio are associated (or correlated) with AbcamPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbcamPLC has no effect on the direction of Mustang Bio i.e., Mustang Bio and AbcamPLC go up and down completely randomly.

Pair Corralation between Mustang Bio and AbcamPLC

If you would invest  2,399  in AbcamPLC on January 26, 2024 and sell it today you would earn a total of  0.00  from holding AbcamPLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Mustang Bio  vs.  AbcamPLC

Mustang Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mustang Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

AbcamPLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AbcamPLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, AbcamPLC is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mustang Bio and AbcamPLC

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

The idea behind Mustang Bio and AbcamPLC 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.