Correlation Between EirGenix and PharmaEngine
Can any of the company-specific risk be diversified away by investing in both EirGenix 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 EirGenix and PharmaEngine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EirGenix and PharmaEngine, you can compare the effects of market volatilities on EirGenix 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 EirGenix with a short position of PharmaEngine. Check out your portfolio center. Please also check ongoing floating volatility patterns of EirGenix and PharmaEngine.
Diversification Opportunities for EirGenix and PharmaEngine
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EirGenix and PharmaEngine is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding EirGenix and PharmaEngine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PharmaEngine and EirGenix 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 EirGenix 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 EirGenix i.e., EirGenix and PharmaEngine go up and down completely randomly.
Pair Corralation between EirGenix and PharmaEngine
Assuming the 90 days trading horizon EirGenix is expected to generate 0.74 times more return on investment than PharmaEngine. However, EirGenix is 1.35 times less risky than PharmaEngine. It trades about 0.31 of its potential returns per unit of risk. PharmaEngine is currently generating about 0.07 per unit of risk. If you would invest 7,250 in EirGenix on November 3, 2024 and sell it today you would earn a total of 800.00 from holding EirGenix or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EirGenix vs. PharmaEngine
Performance |
| Timeline |
| EirGenix |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PharmaEngine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
EirGenix and PharmaEngine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EirGenix and PharmaEngine
The main advantage of trading using opposite EirGenix and PharmaEngine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EirGenix 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.The idea behind EirGenix and PharmaEngine pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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