Correlation Between Biofrontera and Benchmark Botanics

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

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

Diversification Opportunities for Biofrontera and Benchmark Botanics

0.0

Correlation Coefficient

Biofrontera  Benchmark Botanics

Pay attention - limited upside

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

Pair Corralation between Biofrontera and Benchmark Botanics

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	100.0%
Values	Daily Returns

Biofrontera  vs.  Benchmark Botanics

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.

Benchmark Botanics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Benchmark Botanics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Biofrontera and Benchmark Botanics

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

The idea behind Biofrontera and Benchmark Botanics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.