Correlation Between Pharma Mar and Grenergy Renovables

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

By analyzing existing cross correlation between Pharma Mar SA and Grenergy Renovables SA, you can compare the effects of market volatilities on Pharma Mar and Grenergy Renovables 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 Pharma Mar with a short position of Grenergy Renovables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharma Mar and Grenergy Renovables.

Diversification Opportunities for Pharma Mar and Grenergy Renovables

-0.8

Correlation Coefficient

Pharma Mar  Grenergy Renovables

Pay attention - limited upside

The 3 months correlation between Pharma and Grenergy is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pharma Mar SA and Grenergy Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenergy Renovables and Pharma Mar 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 Pharma Mar SA are associated (or correlated) with Grenergy Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenergy Renovables has no effect on the direction of Pharma Mar i.e., Pharma Mar and Grenergy Renovables go up and down completely randomly.

Pair Corralation between Pharma Mar and Grenergy Renovables

Assuming the 90 days trading horizon Pharma Mar SA is expected to generate 1.77 times more return on investment than Grenergy Renovables. However, Pharma Mar is 1.77 times more volatile than Grenergy Renovables SA. It trades about 0.21 of its potential returns per unit of risk. Grenergy Renovables SA is currently generating about -0.13 per unit of risk. If you would invest  4,248  in Pharma Mar SA on September 13, 2024 and sell it today you would earn a total of  3,272  from holding Pharma Mar SA or generate 77.02% return on investment over 90 days.

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

Pharma Mar SA  vs.  Grenergy Renovables SA

Pharma Mar SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pharma Mar SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Pharma Mar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grenergy Renovables

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pharma Mar and Grenergy Renovables

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

The idea behind Pharma Mar SA and Grenergy Renovables SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.