Correlation Between Pharma Mar and Laboratorios Farmaceuticos
Can any of the company-specific risk be diversified away by investing in both Pharma Mar and Laboratorios Farmaceuticos 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 Pharma Mar and Laboratorios Farmaceuticos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pharma Mar SA and Laboratorios Farmaceuticos ROVI, you can compare the effects of market volatilities on Pharma Mar and Laboratorios Farmaceuticos 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 Pharma Mar with a short position of Laboratorios Farmaceuticos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharma Mar and Laboratorios Farmaceuticos.
Diversification Opportunities for Pharma Mar and Laboratorios Farmaceuticos
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pharma and Laboratorios is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pharma Mar SA and Laboratorios Farmaceuticos ROV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorios Farmaceuticos and Pharma Mar 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 Pharma Mar SA are associated (or correlated) with Laboratorios Farmaceuticos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratorios Farmaceuticos has no effect on the direction of Pharma Mar i.e., Pharma Mar and Laboratorios Farmaceuticos go up and down completely randomly.
Pair Corralation between Pharma Mar and Laboratorios Farmaceuticos
Assuming the 90 days trading horizon Pharma Mar SA is expected to generate 0.76 times more return on investment than Laboratorios Farmaceuticos. However, Pharma Mar SA is 1.32 times less risky than Laboratorios Farmaceuticos. It trades about 0.03 of its potential returns per unit of risk. Laboratorios Farmaceuticos ROVI is currently generating about -0.26 per unit of risk. If you would invest 7,465 in Pharma Mar SA on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Pharma Mar SA or generate 1.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pharma Mar SA vs. Laboratorios Farmaceuticos ROV
Performance |
| Timeline |
| Pharma Mar SA |
| Laboratorios Farmaceuticos |
Pharma Mar and Laboratorios Farmaceuticos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pharma Mar and Laboratorios Farmaceuticos
The main advantage of trading using opposite Pharma Mar and Laboratorios Farmaceuticos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pharma Mar position performs unexpectedly, Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos will offset losses from the drop in Laboratorios Farmaceuticos' long position.| Pharma Mar vs. Laboratorios Farmaceuticos ROVI | Pharma Mar vs. Atrys Health SL | Pharma Mar vs. Oryzon Genomics SA |
| Laboratorios Farmaceuticos vs. ENCE Energa y | Laboratorios Farmaceuticos vs. Viscofan | Laboratorios Farmaceuticos vs. Vidrala SA | Laboratorios Farmaceuticos 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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