Correlation Between Eurobio Scientific and OSE Pharma

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

By analyzing existing cross correlation between Eurobio Scientific SA and OSE Pharma SA, you can compare the effects of market volatilities on Eurobio Scientific and OSE Pharma 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 Eurobio Scientific with a short position of OSE Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurobio Scientific and OSE Pharma.

Diversification Opportunities for Eurobio Scientific and OSE Pharma

0.72

Correlation Coefficient

Eurobio Scientific  OSE Pharma

Poor diversification

The 3 months correlation between Eurobio and OSE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eurobio Scientific SA and OSE Pharma SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSE Pharma SA and Eurobio Scientific 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 Eurobio Scientific SA are associated (or correlated) with OSE Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSE Pharma SA has no effect on the direction of Eurobio Scientific i.e., Eurobio Scientific and OSE Pharma go up and down completely randomly.

Pair Corralation between Eurobio Scientific and OSE Pharma

Assuming the 90 days trading horizon Eurobio Scientific SA is expected to generate 0.11 times more return on investment than OSE Pharma. However, Eurobio Scientific SA is 9.48 times less risky than OSE Pharma. It trades about 0.02 of its potential returns per unit of risk. OSE Pharma SA is currently generating about -0.11 per unit of risk. If you would invest  2,580  in Eurobio Scientific SA on September 14, 2024 and sell it today you would earn a total of  5.00  from holding Eurobio Scientific SA or generate 0.19% return on investment over 90 days.

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

Eurobio Scientific SA  vs.  OSE Pharma SA

Eurobio Scientific

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobio Scientific SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Eurobio Scientific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

OSE Pharma SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OSE Pharma SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, OSE Pharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurobio Scientific and OSE Pharma

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

The idea behind Eurobio Scientific SA and OSE Pharma SA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.