Correlation Between OBI Pharma and Intech Biopharm
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Intech Biopharm 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 Intech Biopharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Intech Biopharm, you can compare the effects of market volatilities on OBI Pharma and Intech Biopharm 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 Intech Biopharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Intech Biopharm.
Diversification Opportunities for OBI Pharma and Intech Biopharm
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OBI and Intech is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Intech Biopharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intech Biopharm 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 Intech Biopharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intech Biopharm has no effect on the direction of OBI Pharma i.e., OBI Pharma and Intech Biopharm go up and down completely randomly.
Pair Corralation between OBI Pharma and Intech Biopharm
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Intech Biopharm. In addition to that, OBI Pharma is 1.05 times more volatile than Intech Biopharm. It trades about -0.05 of its total potential returns per unit of risk. Intech Biopharm is currently generating about 0.01 per unit of volatility. If you would invest 2,705 in Intech Biopharm on August 26, 2024 and sell it today you would lose (10.00) from holding Intech Biopharm or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Intech Biopharm
Performance |
| Timeline |
| OBI Pharma |
| Intech Biopharm |
OBI Pharma and Intech Biopharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Intech Biopharm
The main advantage of trading using opposite OBI Pharma and Intech Biopharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Intech Biopharm 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 Intech Biopharm will offset losses from the drop in Intech Biopharm's long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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