Correlation Between Ocean Biomedical and Inter Parfums
Can any of the company-specific risk be diversified away by investing in both Ocean Biomedical and Inter Parfums 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 Ocean Biomedical and Inter Parfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Biomedical and Inter Parfums, you can compare the effects of market volatilities on Ocean Biomedical and Inter Parfums 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 Ocean Biomedical with a short position of Inter Parfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Biomedical and Inter Parfums.
Diversification Opportunities for Ocean Biomedical and Inter Parfums
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ocean and Inter is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Biomedical and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Ocean Biomedical 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 Ocean Biomedical are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Ocean Biomedical i.e., Ocean Biomedical and Inter Parfums go up and down completely randomly.
Pair Corralation between Ocean Biomedical and Inter Parfums
Assuming the 90 days horizon Ocean Biomedical is expected to generate 8.59 times more return on investment than Inter Parfums. However, Ocean Biomedical is 8.59 times more volatile than Inter Parfums. It trades about 0.04 of its potential returns per unit of risk. Inter Parfums is currently generating about 0.08 per unit of risk. If you would invest 5.18 in Ocean Biomedical on August 30, 2024 and sell it today you would lose (1.19) from holding Ocean Biomedical or give up 22.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Ocean Biomedical vs. Inter Parfums
Performance |
| Timeline |
| Ocean Biomedical |
| Inter Parfums |
Ocean Biomedical and Inter Parfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocean Biomedical and Inter Parfums
The main advantage of trading using opposite Ocean Biomedical and Inter Parfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Biomedical position performs unexpectedly, Inter Parfums 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 Inter Parfums will offset losses from the drop in Inter Parfums' long position.| Ocean Biomedical vs. Harmony Gold Mining | Ocean Biomedical vs. Treasury Wine Estates | Ocean Biomedical vs. Zijin Mining Group | Ocean Biomedical vs. National Beverage Corp |
| Inter Parfums vs. Aquagold International | Inter Parfums vs. Morningstar Unconstrained Allocation | Inter Parfums vs. Thrivent High Yield | Inter Parfums vs. Via Renewables |
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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