Correlation Between Microbio and Synmosa Biopharma

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

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

Diversification Opportunities for Microbio and Synmosa Biopharma

-0.08

Correlation Coefficient

Microbio  Synmosa Biopharma

Good diversification

The 3 months correlation between Microbio and Synmosa is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Microbio Co and Synmosa Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synmosa Biopharma and Microbio 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 Microbio Co are associated (or correlated) with Synmosa Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synmosa Biopharma has no effect on the direction of Microbio i.e., Microbio and Synmosa Biopharma go up and down completely randomly.

Pair Corralation between Microbio and Synmosa Biopharma

Assuming the 90 days trading horizon Microbio Co is expected to under-perform the Synmosa Biopharma. In addition to that, Microbio is 1.79 times more volatile than Synmosa Biopharma. It trades about -0.1 of its total potential returns per unit of risk. Synmosa Biopharma is currently generating about 0.03 per unit of volatility. If you would invest  3,370  in Synmosa Biopharma on December 25, 2024 and sell it today you would earn a total of  45.00  from holding Synmosa Biopharma or generate 1.34% return on investment over 90 days.

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

Microbio Co  vs.  Synmosa Biopharma

Microbio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microbio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Synmosa Biopharma

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Synmosa Biopharma are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Synmosa Biopharma is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Microbio and Synmosa Biopharma

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

The idea behind Microbio Co and Synmosa Biopharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.