Correlation Between Pharmacielo and BC Bud

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

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

Diversification Opportunities for Pharmacielo and BC Bud

0.75

Correlation Coefficient

Pharmacielo  BC Bud

Poor diversification

The 3 months correlation between Pharmacielo and BCBCF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pharmacielo and The BC Bud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Bud and Pharmacielo 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 Pharmacielo are associated (or correlated) with BC Bud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Bud has no effect on the direction of Pharmacielo i.e., Pharmacielo and BC Bud go up and down completely randomly.

Pair Corralation between Pharmacielo and BC Bud

Assuming the 90 days horizon Pharmacielo is expected to generate 0.78 times more return on investment than BC Bud. However, Pharmacielo is 1.28 times less risky than BC Bud. It trades about 0.0 of its potential returns per unit of risk. The BC Bud is currently generating about -0.05 per unit of risk. If you would invest  5.38  in Pharmacielo on December 30, 2024 and sell it today you would lose (1.38) from holding Pharmacielo or give up 25.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Pharmacielo  vs.  The BC Bud

Pharmacielo

Risk-Adjusted Performance

Very Weak

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

BC Bud

Risk-Adjusted Performance

Very Weak

Over the last 90 days The BC Bud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pharmacielo and BC Bud

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

The idea behind Pharmacielo and The BC Bud 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.