Correlation Between Abvc Biopharma and Chembio Diagnostics

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Can any of the company-specific risk be diversified away by investing in both Abvc Biopharma and Chembio Diagnostics 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 Abvc Biopharma and Chembio Diagnostics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abvc Biopharma and Chembio Diagnostics, you can compare the effects of market volatilities on Abvc Biopharma and Chembio Diagnostics 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 Abvc Biopharma with a short position of Chembio Diagnostics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abvc Biopharma and Chembio Diagnostics.

Diversification Opportunities for Abvc Biopharma and Chembio Diagnostics

-0.41
  Correlation Coefficient

Very good diversification

The 3 months correlation between Abvc Biopharma and Chembio is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Abvc Biopharma and Chembio Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chembio Diagnostics and Abvc Biopharma 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 Abvc Biopharma are associated (or correlated) with Chembio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chembio Diagnostics has no effect on the direction of Abvc Biopharma i.e., Abvc Biopharma and Chembio Diagnostics go up and down completely randomly.

Pair Corralation between Abvc Biopharma and Chembio Diagnostics

Given the investment horizon of 90 days Abvc Biopharma is expected to generate 1.26 times more return on investment than Chembio Diagnostics. However, Abvc Biopharma is 1.26 times more volatile than Chembio Diagnostics. It trades about -0.09 of its potential returns per unit of risk. Chembio Diagnostics is currently generating about -0.37 per unit of risk. If you would invest  108.00  in Abvc Biopharma on July 5, 2022 and sell it today you would lose (20.00)  from holding Abvc Biopharma or give up 18.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Abvc Biopharma  vs.  Chembio Diagnostics

 Performance (%) 
       Timeline  
Abvc Biopharma 
Abvc Biopharma Performance
0 of 100
Over the last 90 days Abvc Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Abvc Biopharma is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Abvc Biopharma Price Channel

Chembio Diagnostics 
Chembio Performance
0 of 100
Over the last 90 days Chembio Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Chembio Price Channel

Abvc Biopharma and Chembio Diagnostics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Abvc Biopharma and Chembio Diagnostics

The main advantage of trading using opposite Abvc Biopharma and Chembio Diagnostics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abvc Biopharma position performs unexpectedly, Chembio Diagnostics 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 Chembio Diagnostics will offset losses from the drop in Chembio Diagnostics' long position.
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The idea behind Abvc Biopharma and Chembio Diagnostics 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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