Correlation Between Prestige Biologics and MedPacto
Can any of the company-specific risk be diversified away by investing in both Prestige Biologics and MedPacto 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 Prestige Biologics and MedPacto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prestige Biologics Co and MedPacto, you can compare the effects of market volatilities on Prestige Biologics and MedPacto 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 Prestige Biologics with a short position of MedPacto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prestige Biologics and MedPacto.
Diversification Opportunities for Prestige Biologics and MedPacto
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prestige and MedPacto is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Prestige Biologics Co and MedPacto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedPacto and Prestige Biologics 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 Prestige Biologics Co are associated (or correlated) with MedPacto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedPacto has no effect on the direction of Prestige Biologics i.e., Prestige Biologics and MedPacto go up and down completely randomly.
Pair Corralation between Prestige Biologics and MedPacto
Assuming the 90 days trading horizon Prestige Biologics Co is expected to generate 0.85 times more return on investment than MedPacto. However, Prestige Biologics Co is 1.18 times less risky than MedPacto. It trades about 0.04 of its potential returns per unit of risk. MedPacto is currently generating about -0.04 per unit of risk. If you would invest 383,500 in Prestige Biologics Co on August 28, 2024 and sell it today you would earn a total of 142,500 from holding Prestige Biologics Co or generate 37.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prestige Biologics Co vs. MedPacto
Performance |
| Timeline |
| Prestige Biologics |
| MedPacto |
Prestige Biologics and MedPacto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prestige Biologics and MedPacto
The main advantage of trading using opposite Prestige Biologics and MedPacto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prestige Biologics position performs unexpectedly, MedPacto 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 MedPacto will offset losses from the drop in MedPacto's long position.| Prestige Biologics vs. MediaZen | Prestige Biologics vs. DC Media Co | Prestige Biologics vs. ChipsMedia | Prestige Biologics vs. Insung Information Co |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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