Correlation Between Teraplast Bist and Biofarm Bucure
Can any of the company-specific risk be diversified away by investing in both Teraplast Bist 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 Teraplast Bist and Biofarm Bucure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teraplast Bist and Biofarm Bucure, you can compare the effects of market volatilities on Teraplast Bist 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 Teraplast Bist with a short position of Biofarm Bucure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teraplast Bist and Biofarm Bucure.
Diversification Opportunities for Teraplast Bist and Biofarm Bucure
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teraplast and Biofarm is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Teraplast Bist and Biofarm Bucure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofarm Bucure and Teraplast Bist 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 Teraplast Bist 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 Teraplast Bist i.e., Teraplast Bist and Biofarm Bucure go up and down completely randomly.
Pair Corralation between Teraplast Bist and Biofarm Bucure
Assuming the 90 days trading horizon Teraplast Bist is expected to under-perform the Biofarm Bucure. In addition to that, Teraplast Bist is 2.58 times more volatile than Biofarm Bucure. It trades about -0.16 of its total potential returns per unit of risk. Biofarm Bucure is currently generating about -0.17 per unit of volatility. If you would invest 76.00 in Biofarm Bucure on August 28, 2024 and sell it today you would lose (2.00) from holding Biofarm Bucure or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teraplast Bist vs. Biofarm Bucure
Performance |
| Timeline |
| Teraplast Bist |
| Biofarm Bucure |
Teraplast Bist and Biofarm Bucure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teraplast Bist and Biofarm Bucure
The main advantage of trading using opposite Teraplast Bist and Biofarm Bucure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teraplast Bist 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.| Teraplast Bist vs. AROBS TRANSILVANIA SOFTWARE | Teraplast Bist vs. Compania Hoteliera InterContinental | Teraplast Bist vs. Infinity Capital Investments | Teraplast Bist vs. Digi Communications NV |
| Biofarm Bucure vs. Safetech Innovations SA | Biofarm Bucure vs. GRUPUL INDUSTRIAL ELECTROCONTACT | Biofarm Bucure vs. Evergent Investments SA | Biofarm Bucure 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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