Correlation Between Compa Sibiu and Farmaceutica
Can any of the company-specific risk be diversified away by investing in both Compa Sibiu and Farmaceutica 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 Farmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compa Sibiu and Farmaceutica R, you can compare the effects of market volatilities on Compa Sibiu and Farmaceutica 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 Farmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compa Sibiu and Farmaceutica.
Diversification Opportunities for Compa Sibiu and Farmaceutica
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compa and Farmaceutica is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Compa Sibiu and Farmaceutica R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmaceutica R 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 Farmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmaceutica R has no effect on the direction of Compa Sibiu i.e., Compa Sibiu and Farmaceutica go up and down completely randomly.
Pair Corralation between Compa Sibiu and Farmaceutica
Assuming the 90 days trading horizon Compa Sibiu is expected to under-perform the Farmaceutica. In addition to that, Compa Sibiu is 1.35 times more volatile than Farmaceutica R. It trades about -0.09 of its total potential returns per unit of risk. Farmaceutica R is currently generating about 0.02 per unit of volatility. If you would invest 65.00 in Farmaceutica R on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Farmaceutica R or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compa Sibiu vs. Farmaceutica R
Performance |
| Timeline |
| Compa Sibiu |
| Farmaceutica R |
Compa Sibiu and Farmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compa Sibiu and Farmaceutica
The main advantage of trading using opposite Compa Sibiu and Farmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compa Sibiu position performs unexpectedly, Farmaceutica 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 Farmaceutica will offset losses from the drop in Farmaceutica's long position.| Compa Sibiu vs. Patria Bank SA | Compa Sibiu vs. Digi Communications NV | Compa Sibiu vs. Safetech Innovations SA | Compa Sibiu vs. IHUNT TECHNOLOGY IMPORT EXPORT |
| Farmaceutica vs. IHUNT TECHNOLOGY IMPORT EXPORT | Farmaceutica vs. Biofarm Bucure | Farmaceutica vs. TRANSILVANIA LEASING SI | Farmaceutica vs. TRANSILVANIA INVESTMENTS ALLIANCE |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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