Correlation Between Faes Farma and Prim SA
Can any of the company-specific risk be diversified away by investing in both Faes Farma and Prim SA 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 Faes Farma and Prim SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faes Farma SA and Prim SA, you can compare the effects of market volatilities on Faes Farma and Prim SA 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 Faes Farma with a short position of Prim SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faes Farma and Prim SA.
Diversification Opportunities for Faes Farma and Prim SA
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Faes and Prim is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Faes Farma SA and Prim SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prim SA and Faes Farma 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 Faes Farma SA are associated (or correlated) with Prim SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prim SA has no effect on the direction of Faes Farma i.e., Faes Farma and Prim SA go up and down completely randomly.
Pair Corralation between Faes Farma and Prim SA
Assuming the 90 days trading horizon Faes Farma SA is expected to under-perform the Prim SA. But the stock apears to be less risky and, when comparing its historical volatility, Faes Farma SA is 1.38 times less risky than Prim SA. The stock trades about -0.18 of its potential returns per unit of risk. The Prim SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 972.00 in Prim SA on August 30, 2024 and sell it today you would earn a total of 28.00 from holding Prim SA or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Faes Farma SA vs. Prim SA
Performance |
| Timeline |
| Faes Farma SA |
| Prim SA |
Faes Farma and Prim SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faes Farma and Prim SA
The main advantage of trading using opposite Faes Farma and Prim SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faes Farma position performs unexpectedly, Prim SA 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 Prim SA will offset losses from the drop in Prim SA's long position.| Faes Farma vs. ENCE Energa y | Faes Farma vs. Viscofan | Faes Farma vs. Vidrala SA | Faes Farma vs. Ebro Foods |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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