Correlation Between Patria Investments and Biogen

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

By analyzing existing cross correlation between Patria Investments Limited and Biogen Inc, you can compare the effects of market volatilities on Patria Investments and Biogen 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 Patria Investments with a short position of Biogen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Patria Investments and Biogen.

Diversification Opportunities for Patria Investments and Biogen

0.56

Correlation Coefficient

Patria Investments  Biogen

Very weak diversification

The 3 months correlation between Patria and Biogen is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Patria Investments Limited and Biogen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biogen Inc and Patria Investments 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 Patria Investments Limited are associated (or correlated) with Biogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biogen Inc has no effect on the direction of Patria Investments i.e., Patria Investments and Biogen go up and down completely randomly.

Pair Corralation between Patria Investments and Biogen

Assuming the 90 days trading horizon Patria Investments Limited is expected to generate 0.9 times more return on investment than Biogen. However, Patria Investments Limited is 1.11 times less risky than Biogen. It trades about -0.05 of its potential returns per unit of risk. Biogen Inc is currently generating about -0.08 per unit of risk. If you would invest  3,544  in Patria Investments Limited on December 25, 2024 and sell it today you would lose (202.00) from holding Patria Investments Limited or give up 5.7% of portfolio value over 90 days.

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

Patria Investments Limited  vs.  Biogen Inc

Patria Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Patria Investments Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Patria Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biogen Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biogen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Patria Investments and Biogen

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

The idea behind Patria Investments Limited and Biogen Inc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..