Correlation Between GRUPUL INDUSTRIAL and Biofarm Bucure

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

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

Diversification Opportunities for GRUPUL INDUSTRIAL and Biofarm Bucure

-0.61

Correlation Coefficient

GRUPUL INDUSTRIAL  Biofarm Bucure

Excellent diversification

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

Pair Corralation between GRUPUL INDUSTRIAL and Biofarm Bucure

Assuming the 90 days trading horizon GRUPUL INDUSTRIAL ELECTROCONTACT is expected to generate 4.86 times more return on investment than Biofarm Bucure. However, GRUPUL INDUSTRIAL is 4.86 times more volatile than Biofarm Bucure. It trades about 0.08 of its potential returns per unit of risk. Biofarm Bucure is currently generating about -0.03 per unit of risk. If you would invest  4.45  in GRUPUL INDUSTRIAL ELECTROCONTACT on December 30, 2024 and sell it today you would earn a total of  0.95  from holding GRUPUL INDUSTRIAL ELECTROCONTACT or generate 21.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

GRUPUL INDUSTRIAL ELECTROCONTA  vs.  Biofarm Bucure

GRUPUL INDUSTRIAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPUL INDUSTRIAL ELECTROCONTACT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GRUPUL INDUSTRIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

Biofarm Bucure

Risk-Adjusted Performance

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.

Pair Trading with GRUPUL INDUSTRIAL and Biofarm Bucure

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

The idea behind GRUPUL INDUSTRIAL ELECTROCONTACT and Biofarm Bucure 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.