Correlation Between OBI Pharma and PharmaEngine
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and PharmaEngine 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 PharmaEngine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and PharmaEngine, you can compare the effects of market volatilities on OBI Pharma and PharmaEngine 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 PharmaEngine. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and PharmaEngine.
Diversification Opportunities for OBI Pharma and PharmaEngine
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between OBI and PharmaEngine is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and PharmaEngine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PharmaEngine 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 PharmaEngine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PharmaEngine has no effect on the direction of OBI Pharma i.e., OBI Pharma and PharmaEngine go up and down completely randomly.
Pair Corralation between OBI Pharma and PharmaEngine
Assuming the 90 days trading horizon OBI Pharma is expected to generate 0.49 times more return on investment than PharmaEngine. However, OBI Pharma is 2.05 times less risky than PharmaEngine. It trades about -0.13 of its potential returns per unit of risk. PharmaEngine is currently generating about -0.13 per unit of risk. If you would invest 6,520 in OBI Pharma on August 29, 2024 and sell it today you would lose (230.00) from holding OBI Pharma or give up 3.53% 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. PharmaEngine
Performance |
| Timeline |
| OBI Pharma |
| PharmaEngine |
OBI Pharma and PharmaEngine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and PharmaEngine
The main advantage of trading using opposite OBI Pharma and PharmaEngine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, PharmaEngine 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 PharmaEngine will offset losses from the drop in PharmaEngine's long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
| PharmaEngine vs. TaiMed Biologics | PharmaEngine vs. OBI Pharma | PharmaEngine vs. TTY Biopharm Co | PharmaEngine vs. Medigen Biotechnology |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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