Correlation Between ABL Bio and Genexine

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

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

Diversification Opportunities for ABL Bio and Genexine

0.03

Correlation Coefficient

ABL Bio  Genexine

Significant diversification

The 3 months correlation between ABL and Genexine is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ABL Bio and Genexine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genexine and ABL 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 ABL Bio are associated (or correlated) with Genexine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genexine has no effect on the direction of ABL Bio i.e., ABL Bio and Genexine go up and down completely randomly.

Pair Corralation between ABL Bio and Genexine

Assuming the 90 days trading horizon ABL Bio is expected to generate 1.55 times more return on investment than Genexine. However, ABL Bio is 1.55 times more volatile than Genexine. It trades about 0.26 of its potential returns per unit of risk. Genexine is currently generating about -0.08 per unit of risk. If you would invest  2,255,000  in ABL Bio on February 7, 2024 and sell it today you would earn a total of  350,000  from holding ABL Bio or generate 15.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ABL Bio  vs.  Genexine

ABL Bio

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ABL Bio are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ABL Bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Genexine

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ABL Bio and Genexine

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

The idea behind ABL Bio and Genexine 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.