Correlation Between Pharmicell and HJ ShipBuilding

Can any of the company-specific risk be diversified away by investing in both Pharmicell and HJ ShipBuilding 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 Pharmicell and HJ ShipBuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pharmicell and HJ ShipBuilding Construction, you can compare the effects of market volatilities on Pharmicell and HJ ShipBuilding 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 Pharmicell with a short position of HJ ShipBuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharmicell and HJ ShipBuilding.

Diversification Opportunities for Pharmicell and HJ ShipBuilding

0.64

Correlation Coefficient

Pharmicell  HJ ShipBuilding

Poor diversification

The 3 months correlation between Pharmicell and 097230 is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pharmicell and HJ ShipBuilding Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HJ ShipBuilding Cons and Pharmicell 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 Pharmicell are associated (or correlated) with HJ ShipBuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HJ ShipBuilding Cons has no effect on the direction of Pharmicell i.e., Pharmicell and HJ ShipBuilding go up and down completely randomly.

Pair Corralation between Pharmicell and HJ ShipBuilding

Assuming the 90 days trading horizon Pharmicell is expected to under-perform the HJ ShipBuilding. But the stock apears to be less risky and, when comparing its historical volatility, Pharmicell is 1.06 times less risky than HJ ShipBuilding. The stock trades about 0.0 of its potential returns per unit of risk. The HJ ShipBuilding Construction is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  396,000  in HJ ShipBuilding Construction on October 9, 2024 and sell it today you would earn a total of  224,000  from holding HJ ShipBuilding Construction or generate 56.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pharmicell  vs.  HJ ShipBuilding Construction

Pharmicell

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pharmicell are ranked lower than 20 (%) 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.

HJ ShipBuilding Cons

Risk-Adjusted Performance

19 of 100

Solid

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

Pair Trading with Pharmicell and HJ ShipBuilding

The main advantage of trading using opposite Pharmicell and HJ ShipBuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pharmicell position performs unexpectedly, HJ ShipBuilding 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 HJ ShipBuilding will offset losses from the drop in HJ ShipBuilding's long position.

The idea behind Pharmicell and HJ ShipBuilding Construction 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.