Correlation Between Biofarm Bucure and Teraplast Bist
Can any of the company-specific risk be diversified away by investing in both Biofarm Bucure and Teraplast Bist 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 Teraplast Bist into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biofarm Bucure and Teraplast Bist, you can compare the effects of market volatilities on Biofarm Bucure and Teraplast Bist 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 Teraplast Bist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofarm Bucure and Teraplast Bist.
Diversification Opportunities for Biofarm Bucure and Teraplast Bist
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biofarm and Teraplast is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Biofarm Bucure and Teraplast Bist in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teraplast Bist 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 Teraplast Bist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teraplast Bist has no effect on the direction of Biofarm Bucure i.e., Biofarm Bucure and Teraplast Bist go up and down completely randomly.
Pair Corralation between Biofarm Bucure and Teraplast Bist
Assuming the 90 days trading horizon Biofarm Bucure is expected to generate 0.77 times more return on investment than Teraplast Bist. However, Biofarm Bucure is 1.31 times less risky than Teraplast Bist. It trades about 0.02 of its potential returns per unit of risk. Teraplast Bist is currently generating about -0.15 per unit of risk. If you would invest 72.00 in Biofarm Bucure on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Biofarm Bucure or generate 2.78% 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. Teraplast Bist
Performance |
| Timeline |
| Biofarm Bucure |
| Teraplast Bist |
Biofarm Bucure and Teraplast Bist Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biofarm Bucure and Teraplast Bist
The main advantage of trading using opposite Biofarm Bucure and Teraplast Bist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biofarm Bucure position performs unexpectedly, Teraplast Bist 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 Teraplast Bist will offset losses from the drop in Teraplast Bist's long position.| Biofarm Bucure vs. Teraplast Bist | Biofarm Bucure vs. Comvex SA | Biofarm Bucure vs. Feper SA | Biofarm Bucure vs. Uzuc SA |
| Teraplast Bist vs. TRANSILVANIA LEASING SI | Teraplast Bist vs. Patria Bank SA | Teraplast Bist vs. Infinity Capital Investments | Teraplast Bist vs. Erste Group Bank |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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