Correlation Between Phibro Animal and Quantum BioPharma

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

By analyzing existing cross correlation between Phibro Animal Health and Quantum BioPharma, you can compare the effects of market volatilities on Phibro Animal and Quantum BioPharma 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 Phibro Animal with a short position of Quantum BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and Quantum BioPharma.

Diversification Opportunities for Phibro Animal and Quantum BioPharma

0.74

Correlation Coefficient

Phibro Animal  Quantum BioPharma

Poor diversification

The 3 months correlation between Phibro and Quantum is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma and Phibro Animal 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 Phibro Animal Health are associated (or correlated) with Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Phibro Animal i.e., Phibro Animal and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Phibro Animal and Quantum BioPharma

Given the investment horizon of 90 days Phibro Animal Health is expected to under-perform the Quantum BioPharma. But the stock apears to be less risky and, when comparing its historical volatility, Phibro Animal Health is 2.79 times less risky than Quantum BioPharma. The stock trades about -0.09 of its potential returns per unit of risk. The Quantum BioPharma is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  321.00  in Quantum BioPharma on October 24, 2024 and sell it today you would earn a total of  36.00  from holding Quantum BioPharma or generate 11.21% return on investment over 90 days.

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

Phibro Animal Health  vs.  Quantum BioPharma

Phibro Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phibro Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Quantum BioPharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Phibro Animal and Quantum BioPharma

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

The idea behind Phibro Animal Health and Quantum BioPharma 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 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.