Correlation Between OBI Pharma and Merida Industry
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Merida Industry 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 Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Merida Industry Co, you can compare the effects of market volatilities on OBI Pharma and Merida Industry 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 Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Merida Industry.
Diversification Opportunities for OBI Pharma and Merida Industry
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OBI and Merida is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry 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 Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of OBI Pharma i.e., OBI Pharma and Merida Industry go up and down completely randomly.
Pair Corralation between OBI Pharma and Merida Industry
Assuming the 90 days trading horizon OBI Pharma is expected to generate 0.54 times more return on investment than Merida Industry. However, OBI Pharma is 1.85 times less risky than Merida Industry. It trades about -0.13 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.23 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Merida Industry Co
Performance |
| Timeline |
| OBI Pharma |
| Merida Industry |
OBI Pharma and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Merida Industry
The main advantage of trading using opposite OBI Pharma and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry's long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
| Merida Industry vs. Yulon Finance Corp | Merida Industry vs. Taiwan Secom Co | Merida Industry vs. Pou Chen Corp | Merida Industry vs. Great Wall Enterprise |
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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