Correlation Between Biofrontera and Amarin PLC

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

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

Diversification Opportunities for Biofrontera and Amarin PLC

0.46

Correlation Coefficient

Biofrontera  Amarin PLC

Very weak diversification

The 3 months correlation between Biofrontera and Amarin is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Biofrontera and Amarin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarin PLC and Biofrontera 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 Biofrontera are associated (or correlated) with Amarin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarin PLC has no effect on the direction of Biofrontera i.e., Biofrontera and Amarin PLC go up and down completely randomly.

Pair Corralation between Biofrontera and Amarin PLC

Given the investment horizon of 90 days Biofrontera is expected to generate 1.09 times less return on investment than Amarin PLC. But when comparing it to its historical volatility, Biofrontera is 1.25 times less risky than Amarin PLC. It trades about 0.03 of its potential returns per unit of risk. Amarin PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Amarin PLC on December 21, 2024 and sell it today you would earn a total of  0.00  from holding Amarin PLC or generate 0.0% return on investment over 90 days.

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

Biofrontera  vs.  Amarin PLC

Biofrontera

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Biofrontera may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amarin PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amarin PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Amarin PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Biofrontera and Amarin PLC

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

The idea behind Biofrontera and Amarin PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.