Correlation Between Dermapharm Holding and BEXIMCO PHARMAGDR

Can any of the company-specific risk be diversified away by investing in both Dermapharm Holding and BEXIMCO PHARMAGDR 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 Dermapharm Holding and BEXIMCO PHARMAGDR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dermapharm Holding SE and BEXIMCO PHARMAGDR REGS, you can compare the effects of market volatilities on Dermapharm Holding and BEXIMCO PHARMAGDR 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 Dermapharm Holding with a short position of BEXIMCO PHARMAGDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dermapharm Holding and BEXIMCO PHARMAGDR.

Diversification Opportunities for Dermapharm Holding and BEXIMCO PHARMAGDR

0.85

Correlation Coefficient

Dermapharm Holding  BEXIMCO PHARMAGDR

Very poor diversification

The 3 months correlation between Dermapharm and BEXIMCO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dermapharm Holding SE and BEXIMCO PHARMAGDR REGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEXIMCO PHARMAGDR REGS and Dermapharm Holding 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 Dermapharm Holding SE are associated (or correlated) with BEXIMCO PHARMAGDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEXIMCO PHARMAGDR REGS has no effect on the direction of Dermapharm Holding i.e., Dermapharm Holding and BEXIMCO PHARMAGDR go up and down completely randomly.

Pair Corralation between Dermapharm Holding and BEXIMCO PHARMAGDR

Assuming the 90 days trading horizon Dermapharm Holding is expected to generate 1.11 times less return on investment than BEXIMCO PHARMAGDR. But when comparing it to its historical volatility, Dermapharm Holding SE is 1.29 times less risky than BEXIMCO PHARMAGDR. It trades about 0.23 of its potential returns per unit of risk. BEXIMCO PHARMAGDR REGS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  42.00  in BEXIMCO PHARMAGDR REGS on October 15, 2024 and sell it today you would earn a total of  3.00  from holding BEXIMCO PHARMAGDR REGS or generate 7.14% return on investment over 90 days.

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

Dermapharm Holding SE  vs.  BEXIMCO PHARMAGDR REGS

Dermapharm Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dermapharm Holding SE are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Dermapharm Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

BEXIMCO PHARMAGDR REGS

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BEXIMCO PHARMAGDR REGS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BEXIMCO PHARMAGDR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dermapharm Holding and BEXIMCO PHARMAGDR

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

The idea behind Dermapharm Holding SE and BEXIMCO PHARMAGDR REGS 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.