Correlation Between Patria Bank and Farmaceutica
Can any of the company-specific risk be diversified away by investing in both Patria Bank 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 Patria Bank and Farmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Patria Bank SA and Farmaceutica R, you can compare the effects of market volatilities on Patria Bank 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 Patria Bank with a short position of Farmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Bank and Farmaceutica.
Diversification Opportunities for Patria Bank and Farmaceutica
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Patria and Farmaceutica is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Patria Bank SA and Farmaceutica R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmaceutica R and Patria Bank 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 Patria Bank SA 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 Patria Bank i.e., Patria Bank and Farmaceutica go up and down completely randomly.
Pair Corralation between Patria Bank and Farmaceutica
Assuming the 90 days trading horizon Patria Bank SA is expected to under-perform the Farmaceutica. But the stock apears to be less risky and, when comparing its historical volatility, Patria Bank SA is 1.4 times less risky than Farmaceutica. The stock trades about -0.03 of its potential returns per unit of risk. The Farmaceutica R is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Farmaceutica R on September 5, 2024 and sell it today you would lose (4.00) from holding Farmaceutica R or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Patria Bank SA vs. Farmaceutica R
Performance |
| Timeline |
| Patria Bank SA |
| Farmaceutica R |
Patria Bank and Farmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Patria Bank and Farmaceutica
The main advantage of trading using opposite Patria Bank and Farmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patria Bank 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.| Patria Bank vs. Teraplast Bist | Patria Bank vs. Electroarges S | Patria Bank vs. IAR SA | Patria Bank vs. Compa Sibiu |
| Farmaceutica vs. AROBS TRANSILVANIA SOFTWARE | Farmaceutica vs. Biofarm Bucure | Farmaceutica vs. Infinity Capital Investments | Farmaceutica vs. Patria Bank SA |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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