Correlation Between AbL Diagnostics and Bilendi

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

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

Diversification Opportunities for AbL Diagnostics and Bilendi

-0.15

Correlation Coefficient

AbL Diagnostics  Bilendi

Good diversification

The 3 months correlation between AbL and Bilendi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AbL Diagnostics SA and Bilendi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilendi and AbL Diagnostics 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 Diagnostics SA are associated (or correlated) with Bilendi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilendi has no effect on the direction of AbL Diagnostics i.e., AbL Diagnostics and Bilendi go up and down completely randomly.

Pair Corralation between AbL Diagnostics and Bilendi

Assuming the 90 days trading horizon AbL Diagnostics SA is expected to generate 0.55 times more return on investment than Bilendi. However, AbL Diagnostics SA is 1.83 times less risky than Bilendi. It trades about -0.04 of its potential returns per unit of risk. Bilendi is currently generating about -0.1 per unit of risk. If you would invest  304.00  in AbL Diagnostics SA on August 30, 2024 and sell it today you would lose (20.00) from holding AbL Diagnostics SA or give up 6.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

AbL Diagnostics SA  vs.  Bilendi

AbL Diagnostics SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AbL Diagnostics SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AbL Diagnostics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bilendi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bilendi has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with AbL Diagnostics and Bilendi

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

The idea behind AbL Diagnostics SA and Bilendi 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.