Correlation Between Medicofarma Biotech and Amica SA
Can any of the company-specific risk be diversified away by investing in both Medicofarma Biotech and Amica 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 Medicofarma Biotech and Amica SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicofarma Biotech SA and Amica SA, you can compare the effects of market volatilities on Medicofarma Biotech and Amica 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 Medicofarma Biotech with a short position of Amica SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicofarma Biotech and Amica SA.
Diversification Opportunities for Medicofarma Biotech and Amica SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medicofarma and Amica is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Medicofarma Biotech SA and Amica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amica SA and Medicofarma Biotech 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 Medicofarma Biotech SA are associated (or correlated) with Amica SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amica SA has no effect on the direction of Medicofarma Biotech i.e., Medicofarma Biotech and Amica SA go up and down completely randomly.
Pair Corralation between Medicofarma Biotech and Amica SA
Assuming the 90 days trading horizon Medicofarma Biotech SA is expected to generate 1.89 times more return on investment than Amica SA. However, Medicofarma Biotech is 1.89 times more volatile than Amica SA. It trades about 0.05 of its potential returns per unit of risk. Amica SA is currently generating about -0.14 per unit of risk. If you would invest 39.00 in Medicofarma Biotech SA on September 14, 2024 and sell it today you would earn a total of 1.00 from holding Medicofarma Biotech SA or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Medicofarma Biotech SA vs. Amica SA
Performance |
| Timeline |
| Medicofarma Biotech |
| Amica SA |
Medicofarma Biotech and Amica SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicofarma Biotech and Amica SA
The main advantage of trading using opposite Medicofarma Biotech and Amica SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicofarma Biotech position performs unexpectedly, Amica 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 Amica SA will offset losses from the drop in Amica SA's long position.| Medicofarma Biotech vs. Clean Carbon Energy | Medicofarma Biotech vs. ADX | Medicofarma Biotech vs. Agroliga Group PLC | Medicofarma Biotech vs. Vee SA |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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