Correlation Between Pharmacielo and Biofrontera

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

By analyzing existing cross correlation between Pharmacielo and Biofrontera, you can compare the effects of market volatilities on Pharmacielo and Biofrontera 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 Biofrontera. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharmacielo and Biofrontera.

Diversification Opportunities for Pharmacielo and Biofrontera

-0.09

Correlation Coefficient

Pharmacielo  Biofrontera

Good diversification

The 3 months correlation between Pharmacielo and Biofrontera is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pharmacielo and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera 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 Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of Pharmacielo i.e., Pharmacielo and Biofrontera go up and down completely randomly.

Pair Corralation between Pharmacielo and Biofrontera

Assuming the 90 days horizon Pharmacielo is expected to under-perform the Biofrontera. In addition to that, Pharmacielo is 1.34 times more volatile than Biofrontera. It trades about -0.01 of its total potential returns per unit of risk. Biofrontera is currently generating about 0.13 per unit of volatility. If you would invest  71.00  in Biofrontera on October 10, 2024 and sell it today you would earn a total of  40.00  from holding Biofrontera or generate 56.34% return on investment over 90 days.

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

Pharmacielo  vs.  Biofrontera

Pharmacielo

Risk-Adjusted Performance

0 of 100

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.

Biofrontera

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biofrontera are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Biofrontera demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pharmacielo and Biofrontera

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

The idea behind Pharmacielo and Biofrontera 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.