Correlation Between Phibro Animal and UR ENERGY

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

Diversification Opportunities for Phibro Animal and UR ENERGY

-0.36

Correlation Coefficient

Phibro Animal  UR ENERGY

Very good diversification

The 3 months correlation between Phibro and U9T is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and UR ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UR ENERGY 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 UR ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UR ENERGY has no effect on the direction of Phibro Animal i.e., Phibro Animal and UR ENERGY go up and down completely randomly.

Pair Corralation between Phibro Animal and UR ENERGY

Assuming the 90 days horizon Phibro Animal Health is expected to generate 0.7 times more return on investment than UR ENERGY. However, Phibro Animal Health is 1.43 times less risky than UR ENERGY. It trades about -0.02 of its potential returns per unit of risk. UR ENERGY is currently generating about -0.11 per unit of risk. If you would invest  2,010  in Phibro Animal Health on December 19, 2024 and sell it today you would lose (130.00) from holding Phibro Animal Health or give up 6.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Phibro Animal Health  vs.  UR ENERGY

Phibro Animal Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phibro Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Phibro Animal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

UR ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days UR ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Phibro Animal and UR ENERGY

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

The idea behind Phibro Animal Health and UR ENERGY 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.