Correlation Between Compania Hoteliera and Biofarm Bucure
Can any of the company-specific risk be diversified away by investing in both Compania Hoteliera and Biofarm Bucure 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 Compania Hoteliera and Biofarm Bucure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compania Hoteliera InterContinental and Biofarm Bucure, you can compare the effects of market volatilities on Compania Hoteliera and Biofarm Bucure 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 Compania Hoteliera with a short position of Biofarm Bucure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compania Hoteliera and Biofarm Bucure.
Diversification Opportunities for Compania Hoteliera and Biofarm Bucure
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compania and Biofarm is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Compania Hoteliera InterContin and Biofarm Bucure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofarm Bucure and Compania Hoteliera 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 Compania Hoteliera InterContinental are associated (or correlated) with Biofarm Bucure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofarm Bucure has no effect on the direction of Compania Hoteliera i.e., Compania Hoteliera and Biofarm Bucure go up and down completely randomly.
Pair Corralation between Compania Hoteliera and Biofarm Bucure
Assuming the 90 days trading horizon Compania Hoteliera InterContinental is expected to under-perform the Biofarm Bucure. In addition to that, Compania Hoteliera is 1.83 times more volatile than Biofarm Bucure. It trades about -0.27 of its total potential returns per unit of risk. Biofarm Bucure is currently generating about -0.07 per unit of volatility. If you would invest 73.00 in Biofarm Bucure on October 24, 2024 and sell it today you would lose (1.00) from holding Biofarm Bucure or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compania Hoteliera InterContin vs. Biofarm Bucure
Performance |
| Timeline |
| Compania Hoteliera |
| Biofarm Bucure |
Compania Hoteliera and Biofarm Bucure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compania Hoteliera and Biofarm Bucure
The main advantage of trading using opposite Compania Hoteliera and Biofarm Bucure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compania Hoteliera position performs unexpectedly, Biofarm Bucure 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 Biofarm Bucure will offset losses from the drop in Biofarm Bucure's long position.| Compania Hoteliera vs. IHUNT TECHNOLOGY IMPORT EXPORT | Compania Hoteliera vs. Turism Hotelur | Compania Hoteliera vs. GRUPUL INDUSTRIAL ELECTROCONTACT | Compania Hoteliera vs. Infinity Capital Investments |
| Biofarm Bucure vs. Compania Hoteliera InterContinental | Biofarm Bucure vs. Safetech Innovations SA | Biofarm Bucure vs. Patria Bank SA | Biofarm Bucure vs. AROBS TRANSILVANIA SOFTWARE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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