Correlation Between Babcock International and Abengoa SA

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

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

Diversification Opportunities for Babcock International and Abengoa SA

0.0

Correlation Coefficient

Babcock International  Abengoa SA

Pay attention - limited upside

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

Pair Corralation between Babcock International and Abengoa SA

If you would invest  1,190  in Babcock International Group on May 7, 2025 and sell it today you would earn a total of  245.00  from holding Babcock International Group or generate 20.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Babcock International Group  vs.  Abengoa SA

Babcock International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Babcock International Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Babcock International reported solid returns over the last few months and may actually be approaching a breakup point.

Abengoa SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Babcock International and Abengoa SA

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

The idea behind Babcock International Group and Abengoa SA 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.