Correlation Between LIVZON PHARMAC and BEXIMCO PHARMAGDR

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

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

Diversification Opportunities for LIVZON PHARMAC and BEXIMCO PHARMAGDR

-0.02

Correlation Coefficient

LIVZON PHARMAC  BEXIMCO PHARMAGDR

Good diversification

The 3 months correlation between LIVZON and BEXIMCO is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding LIVZON PHARMAC GRP 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 LIVZON PHARMAC 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 LIVZON PHARMAC GRP 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 LIVZON PHARMAC i.e., LIVZON PHARMAC and BEXIMCO PHARMAGDR go up and down completely randomly.

Pair Corralation between LIVZON PHARMAC and BEXIMCO PHARMAGDR

Assuming the 90 days horizon LIVZON PHARMAC is expected to generate 3.06 times less return on investment than BEXIMCO PHARMAGDR. But when comparing it to its historical volatility, LIVZON PHARMAC GRP is 1.9 times less risky than BEXIMCO PHARMAGDR. It trades about 0.15 of its potential returns per unit of risk. BEXIMCO PHARMAGDR REGS is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  31.00  in BEXIMCO PHARMAGDR REGS on September 26, 2024 and sell it today you would earn a total of  10.00  from holding BEXIMCO PHARMAGDR REGS or generate 32.26% return on investment over 90 days.

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

LIVZON PHARMAC GRP  vs.  BEXIMCO PHARMAGDR REGS

LIVZON PHARMAC GRP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIVZON PHARMAC GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, LIVZON PHARMAC reported solid returns over the last few months and may actually be approaching a breakup point.

BEXIMCO PHARMAGDR REGS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BEXIMCO PHARMAGDR REGS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BEXIMCO PHARMAGDR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LIVZON PHARMAC and BEXIMCO PHARMAGDR

The main advantage of trading using opposite LIVZON PHARMAC and BEXIMCO PHARMAGDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIVZON PHARMAC 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 LIVZON PHARMAC GRP 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.