Correlation Between Duopharma Biotech and Farm Price

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

By analyzing existing cross correlation between Duopharma Biotech Bhd and Farm Price Holdings, you can compare the effects of market volatilities on Duopharma Biotech and Farm Price 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 Duopharma Biotech with a short position of Farm Price. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duopharma Biotech and Farm Price.

Diversification Opportunities for Duopharma Biotech and Farm Price

0.31

Correlation Coefficient

Duopharma Biotech  Farm Price

Weak diversification

The 3 months correlation between Duopharma and Farm is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Duopharma Biotech Bhd and Farm Price Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farm Price Holdings and Duopharma Biotech 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 Duopharma Biotech Bhd are associated (or correlated) with Farm Price. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farm Price Holdings has no effect on the direction of Duopharma Biotech i.e., Duopharma Biotech and Farm Price go up and down completely randomly.

Pair Corralation between Duopharma Biotech and Farm Price

Assuming the 90 days trading horizon Duopharma Biotech Bhd is expected to generate 0.95 times more return on investment than Farm Price. However, Duopharma Biotech Bhd is 1.06 times less risky than Farm Price. It trades about 0.09 of its potential returns per unit of risk. Farm Price Holdings is currently generating about -0.02 per unit of risk. If you would invest  117.00  in Duopharma Biotech Bhd on September 12, 2024 and sell it today you would earn a total of  11.00  from holding Duopharma Biotech Bhd or generate 9.4% return on investment over 90 days.

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

Duopharma Biotech Bhd  vs.  Farm Price Holdings

Duopharma Biotech Bhd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Duopharma Biotech Bhd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Duopharma Biotech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Farm Price Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farm Price Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Farm Price is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Duopharma Biotech and Farm Price

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

The idea behind Duopharma Biotech Bhd and Farm Price Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.