Correlation Between Golden Bridge and Pharmicell

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Can any of the company-specific risk be diversified away by investing in both Golden Bridge and Pharmicell 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 Golden Bridge and Pharmicell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Bridge Investment and Pharmicell, you can compare the effects of market volatilities on Golden Bridge and Pharmicell 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 Golden Bridge with a short position of Pharmicell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and Pharmicell.

Diversification Opportunities for Golden Bridge and Pharmicell

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Golden and Pharmicell is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and Pharmicell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmicell and Golden Bridge 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 Golden Bridge Investment are associated (or correlated) with Pharmicell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmicell has no effect on the direction of Golden Bridge i.e., Golden Bridge and Pharmicell go up and down completely randomly.

Pair Corralation between Golden Bridge and Pharmicell

Assuming the 90 days trading horizon Golden Bridge Investment is expected to under-perform the Pharmicell. But the stock apears to be less risky and, when comparing its historical volatility, Golden Bridge Investment is 2.5 times less risky than Pharmicell. The stock trades about -0.1 of its potential returns per unit of risk. The Pharmicell is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  516,000  in Pharmicell on October 11, 2024 and sell it today you would earn a total of  339,000  from holding Pharmicell or generate 65.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Golden Bridge Investment  vs.  Pharmicell

 Performance 
       Timeline  
Golden Bridge Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Golden Bridge Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Pharmicell 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Pharmicell are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Pharmicell sustained solid returns over the last few months and may actually be approaching a breakup point.

Golden Bridge and Pharmicell Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Golden Bridge and Pharmicell

The main advantage of trading using opposite Golden Bridge and Pharmicell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, Pharmicell 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 Pharmicell will offset losses from the drop in Pharmicell's long position.
The idea behind Golden Bridge Investment and Pharmicell pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.

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