Correlation Between United Fire and Biodexa Pharmaceticals
Can any of the company-specific risk be diversified away by investing in both United Fire and Biodexa Pharmaceticals 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 United Fire and Biodexa Pharmaceticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Fire Group and Biodexa Pharmaceticals, you can compare the effects of market volatilities on United Fire and Biodexa Pharmaceticals 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 United Fire with a short position of Biodexa Pharmaceticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and Biodexa Pharmaceticals.
Diversification Opportunities for United Fire and Biodexa Pharmaceticals
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Biodexa is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Biodexa Pharmaceticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biodexa Pharmaceticals and United Fire 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 United Fire Group are associated (or correlated) with Biodexa Pharmaceticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biodexa Pharmaceticals has no effect on the direction of United Fire i.e., United Fire and Biodexa Pharmaceticals go up and down completely randomly.
Pair Corralation between United Fire and Biodexa Pharmaceticals
Given the investment horizon of 90 days United Fire Group is expected to generate 0.7 times more return on investment than Biodexa Pharmaceticals. However, United Fire Group is 1.43 times less risky than Biodexa Pharmaceticals. It trades about 0.4 of its potential returns per unit of risk. Biodexa Pharmaceticals is currently generating about 0.1 per unit of risk. If you would invest 1,932 in United Fire Group on September 5, 2024 and sell it today you would earn a total of 1,134 from holding United Fire Group or generate 58.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Fire Group vs. Biodexa Pharmaceticals
Performance |
| Timeline |
| United Fire Group |
| Biodexa Pharmaceticals |
United Fire and Biodexa Pharmaceticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Fire and Biodexa Pharmaceticals
The main advantage of trading using opposite United Fire and Biodexa Pharmaceticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire position performs unexpectedly, Biodexa Pharmaceticals 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 Biodexa Pharmaceticals will offset losses from the drop in Biodexa Pharmaceticals' long position.| United Fire vs. Donegal Group B | United Fire vs. Horace Mann Educators | United Fire vs. Donegal Group A | United Fire vs. Global Indemnity PLC |
| Biodexa Pharmaceticals vs. BBB Foods | Biodexa Pharmaceticals vs. Old Republic International | Biodexa Pharmaceticals vs. Bridgford Foods | Biodexa Pharmaceticals vs. United Fire Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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