Correlation Between ANI Pharmaceuticals and Biofrontera

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

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

Diversification Opportunities for ANI Pharmaceuticals and Biofrontera

0.21

Correlation Coefficient

ANI Pharmaceuticals  Biofrontera

Modest diversification

The 3 months correlation between ANI and Biofrontera is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and ANI Pharmaceuticals 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 ANI Pharmaceuticals are associated (or correlated) with Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Biofrontera go up and down completely randomly.

Pair Corralation between ANI Pharmaceuticals and Biofrontera

Given the investment horizon of 90 days ANI Pharmaceuticals is expected to under-perform the Biofrontera. But the stock apears to be less risky and, when comparing its historical volatility, ANI Pharmaceuticals is 3.53 times less risky than Biofrontera. The stock trades about -0.05 of its potential returns per unit of risk. The Biofrontera is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Biofrontera on September 2, 2024 and sell it today you would lose (28.00) from holding Biofrontera or give up 23.73% of portfolio value over 90 days.

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

ANI Pharmaceuticals  vs.  Biofrontera

ANI Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Biofrontera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biofrontera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Biofrontera is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ANI Pharmaceuticals and Biofrontera

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

The idea behind ANI Pharmaceuticals and Biofrontera 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.