Correlation Between Compa Sibiu and Biofarm Bucure
Can any of the company-specific risk be diversified away by investing in both Compa Sibiu and Biofarm Bucure 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 Compa Sibiu and Biofarm Bucure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compa Sibiu and Biofarm Bucure, you can compare the effects of market volatilities on Compa Sibiu and Biofarm Bucure 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 Compa Sibiu with a short position of Biofarm Bucure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compa Sibiu and Biofarm Bucure.
Diversification Opportunities for Compa Sibiu and Biofarm Bucure
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compa and Biofarm is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Compa Sibiu and Biofarm Bucure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofarm Bucure and Compa Sibiu 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 Compa Sibiu are associated (or correlated) with Biofarm Bucure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofarm Bucure has no effect on the direction of Compa Sibiu i.e., Compa Sibiu and Biofarm Bucure go up and down completely randomly.
Pair Corralation between Compa Sibiu and Biofarm Bucure
Assuming the 90 days trading horizon Compa Sibiu is expected to under-perform the Biofarm Bucure. In addition to that, Compa Sibiu is 1.63 times more volatile than Biofarm Bucure. It trades about -0.16 of its total potential returns per unit of risk. Biofarm Bucure is currently generating about -0.27 per unit of volatility. If you would invest 76.00 in Biofarm Bucure on August 30, 2024 and sell it today you would lose (4.00) from holding Biofarm Bucure or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compa Sibiu vs. Biofarm Bucure
Performance |
| Timeline |
| Compa Sibiu |
| Biofarm Bucure |
Compa Sibiu and Biofarm Bucure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compa Sibiu and Biofarm Bucure
The main advantage of trading using opposite Compa Sibiu and Biofarm Bucure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compa Sibiu position performs unexpectedly, Biofarm Bucure 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 Biofarm Bucure will offset losses from the drop in Biofarm Bucure's long position.| Compa Sibiu vs. Evergent Investments SA | Compa Sibiu vs. AROBS TRANSILVANIA SOFTWARE | Compa Sibiu vs. IHUNT TECHNOLOGY IMPORT EXPORT | Compa Sibiu vs. Patria Bank 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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