Correlation Between Biofrontera and Amexdrug

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

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

Diversification Opportunities for Biofrontera and Amexdrug

0.0

Correlation Coefficient

Biofrontera  Amexdrug

Pay attention - limited upside

The 3 months correlation between Biofrontera and Amexdrug is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Biofrontera and Amexdrug in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amexdrug 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 Amexdrug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amexdrug has no effect on the direction of Biofrontera i.e., Biofrontera and Amexdrug go up and down completely randomly.

Pair Corralation between Biofrontera and Amexdrug

If you would invest  91.00  in Biofrontera on October 25, 2024 and sell it today you would earn a total of  11.00  from holding Biofrontera or generate 12.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Biofrontera  vs.  Amexdrug

Biofrontera

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Biofrontera demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Amexdrug

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amexdrug has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amexdrug is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biofrontera and Amexdrug

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

The idea behind Biofrontera and Amexdrug 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.