Correlation Between Electromagnetica and Antibiotice

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

By analyzing existing cross correlation between Electromagnetica SA and Antibiotice Ia, you can compare the effects of market volatilities on Electromagnetica and Antibiotice 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 Electromagnetica with a short position of Antibiotice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electromagnetica and Antibiotice.

Diversification Opportunities for Electromagnetica and Antibiotice

0.32

Correlation Coefficient

Electromagnetica  Antibiotice

Weak diversification

The 3 months correlation between Electromagnetica and Antibiotice is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Electromagnetica SA and Antibiotice Ia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antibiotice Ia and Electromagnetica 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 Electromagnetica SA are associated (or correlated) with Antibiotice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antibiotice Ia has no effect on the direction of Electromagnetica i.e., Electromagnetica and Antibiotice go up and down completely randomly.

Pair Corralation between Electromagnetica and Antibiotice

Assuming the 90 days trading horizon Electromagnetica SA is expected to generate 0.69 times more return on investment than Antibiotice. However, Electromagnetica SA is 1.44 times less risky than Antibiotice. It trades about 0.13 of its potential returns per unit of risk. Antibiotice Ia is currently generating about -0.03 per unit of risk. If you would invest  20.00  in Electromagnetica SA on September 27, 2024 and sell it today you would earn a total of  1.00  from holding Electromagnetica SA or generate 5.0% return on investment over 90 days.

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

Electromagnetica SA  vs.  Antibiotice Ia

Electromagnetica

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electromagnetica SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Electromagnetica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Antibiotice Ia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Antibiotice Ia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Electromagnetica and Antibiotice

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

The idea behind Electromagnetica SA and Antibiotice Ia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.