Correlation Between Biofil Chemicals and Akums Drugs

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

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

Diversification Opportunities for Biofil Chemicals and Akums Drugs

0.5

Correlation Coefficient

Biofil Chemicals  Akums Drugs

Very weak diversification

The 3 months correlation between Biofil and Akums is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Biofil Chemicals Pharmaceutica and Akums Drugs and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akums Drugs and Biofil Chemicals 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 Biofil Chemicals Pharmaceuticals are associated (or correlated) with Akums Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akums Drugs has no effect on the direction of Biofil Chemicals i.e., Biofil Chemicals and Akums Drugs go up and down completely randomly.

Pair Corralation between Biofil Chemicals and Akums Drugs

Assuming the 90 days trading horizon Biofil Chemicals Pharmaceuticals is expected to generate 1.29 times more return on investment than Akums Drugs. However, Biofil Chemicals is 1.29 times more volatile than Akums Drugs and. It trades about 0.01 of its potential returns per unit of risk. Akums Drugs and is currently generating about -0.14 per unit of risk. If you would invest  6,395  in Biofil Chemicals Pharmaceuticals on August 31, 2024 and sell it today you would lose (118.00) from holding Biofil Chemicals Pharmaceuticals or give up 1.85% of portfolio value over 90 days.

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

Biofil Chemicals Pharmaceutica  vs.  Akums Drugs and

Biofil Chemicals Pha

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofil Chemicals Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Biofil Chemicals is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Akums Drugs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akums Drugs and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Biofil Chemicals and Akums Drugs

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

The idea behind Biofil Chemicals Pharmaceuticals and Akums Drugs and 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.