Correlation Between Biofarm Bucure and Alumil Rom
Can any of the company-specific risk be diversified away by investing in both Biofarm Bucure and Alumil Rom 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 Biofarm Bucure and Alumil Rom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biofarm Bucure and Alumil Rom Industry, you can compare the effects of market volatilities on Biofarm Bucure and Alumil Rom 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 Biofarm Bucure with a short position of Alumil Rom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofarm Bucure and Alumil Rom.
Diversification Opportunities for Biofarm Bucure and Alumil Rom
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biofarm and Alumil is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Biofarm Bucure and Alumil Rom Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumil Rom Industry and Biofarm Bucure 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 Biofarm Bucure are associated (or correlated) with Alumil Rom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumil Rom Industry has no effect on the direction of Biofarm Bucure i.e., Biofarm Bucure and Alumil Rom go up and down completely randomly.
Pair Corralation between Biofarm Bucure and Alumil Rom
Assuming the 90 days trading horizon Biofarm Bucure is expected to generate 1.92 times less return on investment than Alumil Rom. But when comparing it to its historical volatility, Biofarm Bucure is 1.39 times less risky than Alumil Rom. It trades about 0.05 of its potential returns per unit of risk. Alumil Rom Industry is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 145.00 in Alumil Rom Industry on September 2, 2024 and sell it today you would earn a total of 103.00 from holding Alumil Rom Industry or generate 71.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biofarm Bucure vs. Alumil Rom Industry
Performance |
| Timeline |
| Biofarm Bucure |
| Alumil Rom Industry |
Biofarm Bucure and Alumil Rom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biofarm Bucure and Alumil Rom
The main advantage of trading using opposite Biofarm Bucure and Alumil Rom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biofarm Bucure position performs unexpectedly, Alumil Rom 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 Alumil Rom will offset losses from the drop in Alumil Rom's long position.The idea behind Biofarm Bucure and Alumil Rom Industry 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.| Alumil Rom vs. Infinity Capital Investments | Alumil Rom vs. AROBS TRANSILVANIA SOFTWARE | Alumil Rom vs. Digi Communications NV | Alumil Rom vs. Evergent Investments SA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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