Correlation Between Intech Biopharm and Oceanic Beverages

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

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

Diversification Opportunities for Intech Biopharm and Oceanic Beverages

-0.54

Correlation Coefficient

Intech Biopharm  Oceanic Beverages

Excellent diversification

The 3 months correlation between Intech and Oceanic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Intech Biopharm and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages and Intech Biopharm 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 Intech Biopharm are associated (or correlated) with Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Intech Biopharm i.e., Intech Biopharm and Oceanic Beverages go up and down completely randomly.

Pair Corralation between Intech Biopharm and Oceanic Beverages

Assuming the 90 days trading horizon Intech Biopharm is expected to generate 1.38 times more return on investment than Oceanic Beverages. However, Intech Biopharm is 1.38 times more volatile than Oceanic Beverages Co. It trades about 0.01 of its potential returns per unit of risk. Oceanic Beverages Co is currently generating about -0.05 per unit of risk. If you would invest  2,550  in Intech Biopharm on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Intech Biopharm or generate 0.2% return on investment over 90 days.

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

Intech Biopharm  vs.  Oceanic Beverages Co

Intech Biopharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intech Biopharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Intech Biopharm is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Oceanic Beverages

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oceanic Beverages showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intech Biopharm and Oceanic Beverages

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

The idea behind Intech Biopharm and Oceanic Beverages Co 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.