Correlation Between Biofil Chemicals and General Insurance

Can any of the company-specific risk be diversified away by investing in both Biofil Chemicals and General Insurance 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 General Insurance 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 General Insurance, you can compare the effects of market volatilities on Biofil Chemicals and General Insurance 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 General Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofil Chemicals and General Insurance.

Diversification Opportunities for Biofil Chemicals and General Insurance

0.4

Correlation Coefficient

Biofil Chemicals  General Insurance

Very weak diversification

The 3 months correlation between Biofil and General is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Biofil Chemicals Pharmaceutica and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance 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 General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of Biofil Chemicals i.e., Biofil Chemicals and General Insurance go up and down completely randomly.

Pair Corralation between Biofil Chemicals and General Insurance

Assuming the 90 days trading horizon Biofil Chemicals Pharmaceuticals is expected to generate 1.81 times more return on investment than General Insurance. However, Biofil Chemicals is 1.81 times more volatile than General Insurance. It trades about 0.01 of its potential returns per unit of risk. General Insurance is currently generating about -0.01 per unit of risk. If you would invest  6,395  in Biofil Chemicals Pharmaceuticals on September 1, 2024 and sell it today you would lose (114.00) from holding Biofil Chemicals Pharmaceuticals or give up 1.78% 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.  General Insurance

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.

General Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Biofil Chemicals and General Insurance

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

The idea behind Biofil Chemicals Pharmaceuticals and General Insurance 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.