Correlation Between Leclanche and ABB

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

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

Diversification Opportunities for Leclanche and ABB

-0.67

Correlation Coefficient

Leclanche  ABB

Excellent diversification

The 3 months correlation between Leclanche and ABB is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Leclanche SA and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB and Leclanche 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 Leclanche SA are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of Leclanche i.e., Leclanche and ABB go up and down completely randomly.

Pair Corralation between Leclanche and ABB

Assuming the 90 days trading horizon Leclanche SA is expected to under-perform the ABB. In addition to that, Leclanche is 4.18 times more volatile than ABB. It trades about -0.05 of its total potential returns per unit of risk. ABB is currently generating about 0.19 per unit of volatility. If you would invest  5,302  in ABB on August 5, 2025 and sell it today you would earn a total of  664.00  from holding ABB or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Leclanche SA  vs.  ABB

Leclanche SA

Risk-Adjusted Performance

Weakest

Over the last 90 days Leclanche SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

ABB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ABB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ABB may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Leclanche and ABB

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

The idea behind Leclanche SA and ABB 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..