Correlation Between Biofarm Bucure and Germina Agribusiness

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

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

Diversification Opportunities for Biofarm Bucure and Germina Agribusiness

0.61

Correlation Coefficient

Biofarm Bucure  Germina Agribusiness

Poor diversification

The 3 months correlation between Biofarm and Germina is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Biofarm Bucure and Germina Agribusiness SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Germina Agribusiness and Biofarm Bucure 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 Biofarm Bucure are associated (or correlated) with Germina Agribusiness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Germina Agribusiness has no effect on the direction of Biofarm Bucure i.e., Biofarm Bucure and Germina Agribusiness go up and down completely randomly.

Pair Corralation between Biofarm Bucure and Germina Agribusiness

Assuming the 90 days trading horizon Biofarm Bucure is expected to generate 0.4 times more return on investment than Germina Agribusiness. However, Biofarm Bucure is 2.5 times less risky than Germina Agribusiness. It trades about -0.05 of its potential returns per unit of risk. Germina Agribusiness SA is currently generating about -0.03 per unit of risk. If you would invest  75.00  in Biofarm Bucure on October 24, 2024 and sell it today you would lose (3.00) from holding Biofarm Bucure or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.21%
Values	Daily Returns

Biofarm Bucure  vs.  Germina Agribusiness SA

Biofarm Bucure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biofarm Bucure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Biofarm Bucure is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Germina Agribusiness

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Germina Agribusiness SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Germina Agribusiness is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Biofarm Bucure and Germina Agribusiness

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

The idea behind Biofarm Bucure and Germina Agribusiness 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..