Correlation Between OBI Pharma and Lotes
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Lotes 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 OBI Pharma and Lotes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Lotes Co, you can compare the effects of market volatilities on OBI Pharma and Lotes 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 OBI Pharma with a short position of Lotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Lotes.
Diversification Opportunities for OBI Pharma and Lotes
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between OBI and Lotes is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Lotes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotes and OBI Pharma 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 OBI Pharma are associated (or correlated) with Lotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotes has no effect on the direction of OBI Pharma i.e., OBI Pharma and Lotes go up and down completely randomly.
Pair Corralation between OBI Pharma and Lotes
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Lotes. But the stock apears to be less risky and, when comparing its historical volatility, OBI Pharma is 1.56 times less risky than Lotes. The stock trades about -0.17 of its potential returns per unit of risk. The Lotes Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 167,000 in Lotes Co on August 30, 2024 and sell it today you would lose (2,000) from holding Lotes Co or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Lotes Co
Performance |
| Timeline |
| OBI Pharma |
| Lotes |
OBI Pharma and Lotes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Lotes
The main advantage of trading using opposite OBI Pharma and Lotes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Lotes 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 Lotes will offset losses from the drop in Lotes' long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
| Lotes vs. Unimicron Technology Corp | Lotes vs. Alchip Technologies | Lotes vs. Nan Ya Printed | Lotes vs. Global Unichip Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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