Correlation Between Mapfre and Biotechnology Assets

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

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

Diversification Opportunities for Mapfre and Biotechnology Assets

-0.31

Correlation Coefficient

Mapfre  Biotechnology Assets

Very good diversification

The 3 months correlation between Mapfre and Biotechnology is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mapfre and Biotechnology Assets SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Assets and Mapfre 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 Mapfre are associated (or correlated) with Biotechnology Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Assets has no effect on the direction of Mapfre i.e., Mapfre and Biotechnology Assets go up and down completely randomly.

Pair Corralation between Mapfre and Biotechnology Assets

Assuming the 90 days trading horizon Mapfre is expected to under-perform the Biotechnology Assets. But the stock apears to be less risky and, when comparing its historical volatility, Mapfre is 9.78 times less risky than Biotechnology Assets. The stock trades about -0.13 of its potential returns per unit of risk. The Biotechnology Assets SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  27.00  in Biotechnology Assets SA on September 5, 2024 and sell it today you would earn a total of  4.00  from holding Biotechnology Assets SA or generate 14.81% return on investment over 90 days.

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

Mapfre  vs.  Biotechnology Assets SA

Mapfre

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Mapfre may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Biotechnology Assets

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biotechnology Assets SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Biotechnology Assets may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mapfre and Biotechnology Assets

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

The idea behind Mapfre and Biotechnology Assets SA 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.