Correlation Between Phibro Animal and Viatris

Can any of the company-specific risk be diversified away by investing in both Phibro Animal and Viatris 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 Viatris 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 Viatris, you can compare the effects of market volatilities on Phibro Animal and Viatris 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 Viatris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phibro Animal and Viatris.

Diversification Opportunities for Phibro Animal and Viatris

-0.33

Correlation Coefficient

Phibro Animal  Viatris

Very good diversification

The 3 months correlation between Phibro and Viatris is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and Viatris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viatris 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 Viatris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viatris has no effect on the direction of Phibro Animal i.e., Phibro Animal and Viatris go up and down completely randomly.

Pair Corralation between Phibro Animal and Viatris

Given the investment horizon of 90 days Phibro Animal Health is expected to generate 1.34 times more return on investment than Viatris. However, Phibro Animal is 1.34 times more volatile than Viatris. It trades about 0.04 of its potential returns per unit of risk. Viatris is currently generating about -0.21 per unit of risk. If you would invest  2,087  in Phibro Animal Health on December 29, 2024 and sell it today you would earn a total of  81.00  from holding Phibro Animal Health or generate 3.88% return on investment over 90 days.

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

Phibro Animal Health  vs.  Viatris

Phibro Animal Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Phibro Animal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Viatris

Risk-Adjusted Performance

Very Weak

Over the last 90 days Viatris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Phibro Animal and Viatris

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

The idea behind Phibro Animal Health and Viatris 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.