Correlation Between Biofil Chemicals and Medplus Health

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

Diversification Opportunities for Biofil Chemicals and Medplus Health

-0.6

Correlation Coefficient

Biofil Chemicals  Medplus Health

Excellent diversification

The 3 months correlation between Biofil and Medplus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Biofil Chemicals Pharmaceutica and Medplus Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medplus Health Services 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 Medplus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medplus Health Services has no effect on the direction of Biofil Chemicals i.e., Biofil Chemicals and Medplus Health go up and down completely randomly.

Pair Corralation between Biofil Chemicals and Medplus Health

Assuming the 90 days trading horizon Biofil Chemicals Pharmaceuticals is expected to generate 2.4 times more return on investment than Medplus Health. However, Biofil Chemicals is 2.4 times more volatile than Medplus Health Services. It trades about 0.03 of its potential returns per unit of risk. Medplus Health Services is currently generating about 0.03 per unit of risk. If you would invest  5,085  in Biofil Chemicals Pharmaceuticals on October 6, 2024 and sell it today you would earn a total of  1,064  from holding Biofil Chemicals Pharmaceuticals or generate 20.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.34%
Values	Daily Returns

Biofil Chemicals Pharmaceutica  vs.  Medplus Health Services

Biofil Chemicals Pha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biofil Chemicals Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Medplus Health Services

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Medplus Health Services are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Medplus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biofil Chemicals and Medplus Health

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

The idea behind Biofil Chemicals Pharmaceuticals and Medplus Health Services 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.