Correlation Between BNK Financial and Pharmicell

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

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

Diversification Opportunities for BNK Financial and Pharmicell

0.44

Correlation Coefficient

BNK Financial  Pharmicell

Very weak diversification

The 3 months correlation between BNK and Pharmicell is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BNK Financial Group and Pharmicell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmicell and BNK Financial 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 BNK Financial Group 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 BNK Financial i.e., BNK Financial and Pharmicell go up and down completely randomly.

Pair Corralation between BNK Financial and Pharmicell

Assuming the 90 days trading horizon BNK Financial is expected to generate 1.15 times less return on investment than Pharmicell. But when comparing it to its historical volatility, BNK Financial Group is 2.27 times less risky than Pharmicell. It trades about 0.37 of its potential returns per unit of risk. Pharmicell is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  800,000  in Pharmicell on October 26, 2024 and sell it today you would earn a total of  108,000  from holding Pharmicell or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

BNK Financial Group  vs.  Pharmicell

BNK Financial Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNK Financial Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BNK Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pharmicell

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pharmicell are ranked lower than 21 (%) 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.

Pair Trading with BNK Financial and Pharmicell

The main advantage of trading using opposite BNK Financial and Pharmicell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNK Financial 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 BNK Financial Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.