Correlation Between Benchmark Botanics and Phibro Animal

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

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

Diversification Opportunities for Benchmark Botanics and Phibro Animal

-0.06

Correlation Coefficient

Benchmark Botanics  Phibro Animal

Good diversification

The 3 months correlation between Benchmark and Phibro is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Botanics and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health and Benchmark Botanics 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 Benchmark Botanics are associated (or correlated) with Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Benchmark Botanics i.e., Benchmark Botanics and Phibro Animal go up and down completely randomly.

Pair Corralation between Benchmark Botanics and Phibro Animal

Assuming the 90 days horizon Benchmark Botanics is expected to under-perform the Phibro Animal. In addition to that, Benchmark Botanics is 3.98 times more volatile than Phibro Animal Health. It trades about -0.13 of its total potential returns per unit of risk. Phibro Animal Health is currently generating about 0.03 per unit of volatility. If you would invest  2,087  in Phibro Animal Health on December 30, 2024 and sell it today you would earn a total of  59.00  from holding Phibro Animal Health or generate 2.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Benchmark Botanics  vs.  Phibro Animal Health

Benchmark Botanics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benchmark Botanics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Phibro Animal Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Phibro Animal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Benchmark Botanics and Phibro Animal

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

The idea behind Benchmark Botanics and Phibro Animal Health 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.