Correlation Between Antibiotice and Aerostar Bacau

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

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

Diversification Opportunities for Antibiotice and Aerostar Bacau

-0.68

Correlation Coefficient

Antibiotice  Aerostar Bacau

Excellent diversification

The 3 months correlation between Antibiotice and Aerostar is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Antibiotice Ia and Aerostar Bacau in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerostar Bacau and Antibiotice 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 Antibiotice Ia are associated (or correlated) with Aerostar Bacau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerostar Bacau has no effect on the direction of Antibiotice i.e., Antibiotice and Aerostar Bacau go up and down completely randomly.

Pair Corralation between Antibiotice and Aerostar Bacau

Assuming the 90 days trading horizon Antibiotice Ia is expected to under-perform the Aerostar Bacau. But the stock apears to be less risky and, when comparing its historical volatility, Antibiotice Ia is 1.51 times less risky than Aerostar Bacau. The stock trades about -0.18 of its potential returns per unit of risk. The Aerostar Bacau is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  848.00  in Aerostar Bacau on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Aerostar Bacau or generate 11.79% return on investment over 90 days.

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

Antibiotice Ia  vs.  Aerostar Bacau

Antibiotice Ia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Antibiotice Ia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Aerostar Bacau

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aerostar Bacau are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aerostar Bacau displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Antibiotice and Aerostar Bacau

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

The idea behind Antibiotice Ia and Aerostar Bacau 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.