Correlation Between Abcam Plc and Eliem Therapeutics

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

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

Diversification Opportunities for Abcam Plc and Eliem Therapeutics

0.0

Correlation Coefficient

Abcam Plc  Eliem Therapeutics

Pay attention - limited upside

The 3 months correlation between Abcam and Eliem is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Abcam plc and Eliem Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eliem Therapeutics and Abcam 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 Abcam plc are associated (or correlated) with Eliem Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eliem Therapeutics has no effect on the direction of Abcam Plc i.e., Abcam Plc and Eliem Therapeutics go up and down completely randomly.

Pair Corralation between Abcam Plc and Eliem Therapeutics

If you would invest  2,225  in Abcam plc on June 30, 2024 and sell it today you would earn a total of  0.00  from holding Abcam plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Abcam plc  vs.  Eliem Therapeutics

Abcam plc

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Abcam plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Abcam Plc is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Eliem Therapeutics

Risk-Adjusted Performance

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Very Weak

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

Pair Trading with Abcam Plc and Eliem Therapeutics

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

The idea behind Abcam plc and Eliem Therapeutics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.