Correlation Between Central Industrial and Duopharma Biotech

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

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

Diversification Opportunities for Central Industrial and Duopharma Biotech

-0.75

Correlation Coefficient

Central Industrial  Duopharma Biotech

Pay attention - limited upside

The 3 months correlation between Central and Duopharma is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Central Industrial Corp and Duopharma Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duopharma Biotech Bhd and Central Industrial 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 Central Industrial Corp are associated (or correlated) with Duopharma Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duopharma Biotech Bhd has no effect on the direction of Central Industrial i.e., Central Industrial and Duopharma Biotech go up and down completely randomly.

Pair Corralation between Central Industrial and Duopharma Biotech

Assuming the 90 days trading horizon Central Industrial Corp is expected to generate 1.49 times more return on investment than Duopharma Biotech. However, Central Industrial is 1.49 times more volatile than Duopharma Biotech Bhd. It trades about 0.26 of its potential returns per unit of risk. Duopharma Biotech Bhd is currently generating about -0.21 per unit of risk. If you would invest  86.00  in Central Industrial Corp on October 7, 2024 and sell it today you would earn a total of  5.00  from holding Central Industrial Corp or generate 5.81% return on investment over 90 days.

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

Central Industrial Corp  vs.  Duopharma Biotech Bhd

Central Industrial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Central Industrial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Central Industrial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Duopharma Biotech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duopharma Biotech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Central Industrial and Duopharma Biotech

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

The idea behind Central Industrial Corp and Duopharma Biotech Bhd 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..