Correlation Between Antibiotice and Electromagnetica

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

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

Diversification Opportunities for Antibiotice and Electromagnetica

0.32

Correlation Coefficient

Antibiotice  Electromagnetica

Weak diversification

The 3 months correlation between Antibiotice and Electromagnetica is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Antibiotice Ia and Electromagnetica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetica 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 Electromagnetica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetica has no effect on the direction of Antibiotice i.e., Antibiotice and Electromagnetica go up and down completely randomly.

Pair Corralation between Antibiotice and Electromagnetica

Assuming the 90 days trading horizon Antibiotice Ia is expected to generate 0.79 times more return on investment than Electromagnetica. However, Antibiotice Ia is 1.27 times less risky than Electromagnetica. It trades about 0.14 of its potential returns per unit of risk. Electromagnetica SA is currently generating about 0.04 per unit of risk. If you would invest  55.00  in Antibiotice Ia on September 26, 2024 and sell it today you would earn a total of  205.00  from holding Antibiotice Ia or generate 372.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.17%
Values	Daily Returns

Antibiotice Ia  vs.  Electromagnetica SA

Antibiotice Ia

Risk-Adjusted Performance

0 of 100

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Electromagnetica

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electromagnetica SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Electromagnetica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Antibiotice and Electromagnetica

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

The idea behind Antibiotice Ia and Electromagnetica 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.