Correlation Between Faron Pharmaceuticals and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both Faron Pharmaceuticals and Baker Hughes 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 Faron Pharmaceuticals and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faron Pharmaceuticals Oy and Baker Hughes Co, you can compare the effects of market volatilities on Faron Pharmaceuticals and Baker Hughes 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 Faron Pharmaceuticals with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faron Pharmaceuticals and Baker Hughes.
Diversification Opportunities for Faron Pharmaceuticals and Baker Hughes
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faron and Baker is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Faron Pharmaceuticals Oy and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and Faron Pharmaceuticals 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 Faron Pharmaceuticals Oy are associated (or correlated) with Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of Faron Pharmaceuticals i.e., Faron Pharmaceuticals and Baker Hughes go up and down completely randomly.
Pair Corralation between Faron Pharmaceuticals and Baker Hughes
Assuming the 90 days trading horizon Faron Pharmaceuticals is expected to generate 3.57 times less return on investment than Baker Hughes. In addition to that, Faron Pharmaceuticals is 2.84 times more volatile than Baker Hughes Co. It trades about 0.01 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.05 per unit of volatility. If you would invest 2,929 in Baker Hughes Co on October 14, 2024 and sell it today you would earn a total of 1,377 from holding Baker Hughes Co or generate 47.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Faron Pharmaceuticals Oy vs. Baker Hughes Co
Performance |
| Timeline |
| Faron Pharmaceuticals |
| Baker Hughes |
Faron Pharmaceuticals and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faron Pharmaceuticals and Baker Hughes
The main advantage of trading using opposite Faron Pharmaceuticals and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faron Pharmaceuticals position performs unexpectedly, Baker Hughes 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 Baker Hughes will offset losses from the drop in Baker Hughes' long position.| Faron Pharmaceuticals vs. Omega Healthcare Investors | Faron Pharmaceuticals vs. Invesco Physical Silver | Faron Pharmaceuticals vs. Cardinal Health | Faron Pharmaceuticals vs. Anglo Asian Mining |
| Baker Hughes vs. Lundin Mining Corp | Baker Hughes vs. Deltex Medical Group | Baker Hughes vs. Cornish Metals | Baker Hughes vs. URU Metals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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