Correlation Between Armada Hflr and Hikma Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Hikma Pharmaceuticals 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 Armada Hflr and Hikma Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and Hikma Pharmaceuticals PLC, you can compare the effects of market volatilities on Armada Hflr and Hikma Pharmaceuticals 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 Armada Hflr with a short position of Hikma Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Hikma Pharmaceuticals.
Diversification Opportunities for Armada Hflr and Hikma Pharmaceuticals
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Armada and Hikma is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Hikma Pharmaceuticals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hikma Pharmaceuticals PLC and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Hikma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hikma Pharmaceuticals PLC has no effect on the direction of Armada Hflr i.e., Armada Hflr and Hikma Pharmaceuticals go up and down completely randomly.
Pair Corralation between Armada Hflr and Hikma Pharmaceuticals
Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Hikma Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.35 times less risky than Hikma Pharmaceuticals. The stock trades about -0.02 of its potential returns per unit of risk. The Hikma Pharmaceuticals PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,357 in Hikma Pharmaceuticals PLC on September 14, 2024 and sell it today you would earn a total of 675.00 from holding Hikma Pharmaceuticals PLC or generate 15.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
Armada Hflr Pr vs. Hikma Pharmaceuticals PLC
Performance |
| Timeline |
| Armada Hflr Pr |
| Hikma Pharmaceuticals PLC |
Armada Hflr and Hikma Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and Hikma Pharmaceuticals
The main advantage of trading using opposite Armada Hflr and Hikma Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Hikma Pharmaceuticals 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 Hikma Pharmaceuticals will offset losses from the drop in Hikma Pharmaceuticals' long position.| Armada Hflr vs. Modiv Inc | Armada Hflr vs. Precinct Properties New | Armada Hflr vs. Global Net Lease | Armada Hflr vs. NexPoint Diversified Real |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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