Correlation Between Abbott India and Hathway Cable

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

By analyzing existing cross correlation between Abbott India Limited and Hathway Cable Datacom, you can compare the effects of market volatilities on Abbott India and Hathway Cable 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 Abbott India with a short position of Hathway Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbott India and Hathway Cable.

Diversification Opportunities for Abbott India and Hathway Cable

0.65

Correlation Coefficient

Abbott India  Hathway Cable

Poor diversification

The 3 months correlation between Abbott and Hathway is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Abbott India Limited and Hathway Cable Datacom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hathway Cable Datacom and Abbott India 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 Abbott India Limited are associated (or correlated) with Hathway Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hathway Cable Datacom has no effect on the direction of Abbott India i.e., Abbott India and Hathway Cable go up and down completely randomly.

Pair Corralation between Abbott India and Hathway Cable

Assuming the 90 days trading horizon Abbott India is expected to generate 1.24 times less return on investment than Hathway Cable. But when comparing it to its historical volatility, Abbott India Limited is 1.27 times less risky than Hathway Cable. It trades about 0.22 of its potential returns per unit of risk. Hathway Cable Datacom is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,246  in Hathway Cable Datacom on April 5, 2025 and sell it today you would earn a total of  350.00  from holding Hathway Cable Datacom or generate 28.09% return on investment over 90 days.

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

Abbott India Limited  vs.  Hathway Cable Datacom

Abbott India Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Abbott India Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Abbott India displayed solid returns over the last few months and may actually be approaching a breakup point.

Hathway Cable Datacom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hathway Cable Datacom are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Hathway Cable showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Abbott India and Hathway Cable

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

The idea behind Abbott India Limited and Hathway Cable Datacom 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.