Correlation Between Embracer Group and Abeona Therapeutics

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

Diversification Opportunities for Embracer Group and Abeona Therapeutics

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Embracer and Abeona is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Embracer Group AB and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Embracer Group 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 Embracer Group AB 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 Embracer Group i.e., Embracer Group and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Embracer Group and Abeona Therapeutics

If you would invest  321.00  in Abeona Therapeutics on September 5, 2022 and sell it today you would earn a total of  78.00  from holding Abeona Therapeutics or generate 24.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Embracer Group AB  vs.  Abeona Therapeutics

 Performance (%) 
       Timeline  
Embracer Group AB 
Embracer Performance
0 of 100
Over the last 90 days Embracer Group AB 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 rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Abeona Therapeutics 
Abeona Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Abeona Therapeutics are ranked lower than 3 (%) 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

Embracer Group and Abeona Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Embracer Group and Abeona Therapeutics

The main advantage of trading using opposite Embracer Group and Abeona Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embracer Group 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.
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Embracer Group as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Embracer Group's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Embracer Group's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Embracer Group AB.
The idea behind Embracer Group AB 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 Fund Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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