Correlation Between Nintendo and Abeona Therapeutics

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

Diversification Opportunities for Nintendo and Abeona Therapeutics

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Nintendo and Abeona is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Ltd ADR and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Nintendo 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 Nintendo Ltd ADR are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Nintendo i.e., Nintendo and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Nintendo and Abeona Therapeutics

Assuming the 90 days horizon Nintendo Ltd ADR is expected to generate 0.29 times more return on investment than Abeona Therapeutics. However, Nintendo Ltd ADR is 3.48 times less risky than Abeona Therapeutics. It trades about -0.02 of its potential returns per unit of risk. Abeona Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  1,326  in Nintendo Ltd ADR on September 1, 2022 and sell it today you would lose (267.00)  from holding Nintendo Ltd ADR or give up 20.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nintendo Ltd ADR  vs.  Abeona Therapeutics

 Performance (%) 
       Timeline  
Nintendo ADR 
Nintendo Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Ltd ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nintendo may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Nintendo Price Channel

Abeona Therapeutics 
Abeona Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Abeona Therapeutics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Abeona Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Abeona Price Channel

Nintendo and Abeona Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nintendo and Abeona Therapeutics

The main advantage of trading using opposite Nintendo and Abeona Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo position performs unexpectedly, Abeona 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 Abeona Therapeutics will offset losses from the drop in Abeona Therapeutics' long position.
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The idea behind Nintendo Ltd ADR and Abeona 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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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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