Correlation Between OBI Pharma and Rafael Microelectronics
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Rafael Microelectronics 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 Rafael Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Rafael Microelectronics, you can compare the effects of market volatilities on OBI Pharma and Rafael Microelectronics 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 Rafael Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Rafael Microelectronics.
Diversification Opportunities for OBI Pharma and Rafael Microelectronics
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBI and Rafael is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Rafael Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafael Microelectronics 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 Rafael Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafael Microelectronics has no effect on the direction of OBI Pharma i.e., OBI Pharma and Rafael Microelectronics go up and down completely randomly.
Pair Corralation between OBI Pharma and Rafael Microelectronics
Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Rafael Microelectronics. But the stock apears to be less risky and, when comparing its historical volatility, OBI Pharma is 1.09 times less risky than Rafael Microelectronics. The stock trades about -0.04 of its potential returns per unit of risk. The Rafael Microelectronics is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 15,487 in Rafael Microelectronics on August 31, 2024 and sell it today you would lose (3,337) from holding Rafael Microelectronics or give up 21.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
OBI Pharma vs. Rafael Microelectronics
Performance |
| Timeline |
| OBI Pharma |
| Rafael Microelectronics |
OBI Pharma and Rafael Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Rafael Microelectronics
The main advantage of trading using opposite OBI Pharma and Rafael Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Rafael Microelectronics 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 Rafael Microelectronics will offset losses from the drop in Rafael Microelectronics' long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
| Rafael Microelectronics vs. Insyde Software | Rafael Microelectronics vs. Tainet Communication System | Rafael Microelectronics vs. Newretail Co | Rafael Microelectronics vs. Lung Hwa Electronics |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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