Correlation Between Pfeiffer Vacuum and Faron Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Pfeiffer Vacuum and Faron Pharmaceuticals 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 Pfeiffer Vacuum and Faron Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfeiffer Vacuum Technology and Faron Pharmaceuticals Oy, you can compare the effects of market volatilities on Pfeiffer Vacuum and Faron Pharmaceuticals 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 Pfeiffer Vacuum with a short position of Faron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfeiffer Vacuum and Faron Pharmaceuticals.
Diversification Opportunities for Pfeiffer Vacuum and Faron Pharmaceuticals
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pfeiffer and Faron is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pfeiffer Vacuum Technology and Faron Pharmaceuticals Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faron Pharmaceuticals and Pfeiffer Vacuum 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 Pfeiffer Vacuum Technology are associated (or correlated) with Faron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faron Pharmaceuticals has no effect on the direction of Pfeiffer Vacuum i.e., Pfeiffer Vacuum and Faron Pharmaceuticals go up and down completely randomly.
Pair Corralation between Pfeiffer Vacuum and Faron Pharmaceuticals
Assuming the 90 days trading horizon Pfeiffer Vacuum is expected to generate 2.04 times less return on investment than Faron Pharmaceuticals. But when comparing it to its historical volatility, Pfeiffer Vacuum Technology is 13.69 times less risky than Faron Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Faron Pharmaceuticals Oy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26,500 in Faron Pharmaceuticals Oy on September 21, 2024 and sell it today you would lose (10,000) from holding Faron Pharmaceuticals Oy or give up 37.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfeiffer Vacuum Technology vs. Faron Pharmaceuticals Oy
Performance |
| Timeline |
| Pfeiffer Vacuum Tech |
| Faron Pharmaceuticals |
Pfeiffer Vacuum and Faron Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfeiffer Vacuum and Faron Pharmaceuticals
The main advantage of trading using opposite Pfeiffer Vacuum and Faron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfeiffer Vacuum position performs unexpectedly, Faron Pharmaceuticals 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 Faron Pharmaceuticals will offset losses from the drop in Faron Pharmaceuticals' long position.| Pfeiffer Vacuum vs. Samsung Electronics Co | Pfeiffer Vacuum vs. Samsung Electronics Co | Pfeiffer Vacuum vs. Hyundai Motor | Pfeiffer Vacuum vs. Reliance Industries Ltd |
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 the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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