Correlation Between Procaps Group and Biofrontera

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

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

Diversification Opportunities for Procaps Group and Biofrontera

0.2

Correlation Coefficient

Procaps Group  Biofrontera

Modest diversification

The 3 months correlation between Procaps and Biofrontera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Procaps Group SA and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and Procaps Group 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 Procaps Group SA 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 Procaps Group i.e., Procaps Group and Biofrontera go up and down completely randomly.

Pair Corralation between Procaps Group and Biofrontera

Given the investment horizon of 90 days Procaps Group SA is expected to generate 3.41 times more return on investment than Biofrontera. However, Procaps Group is 3.41 times more volatile than Biofrontera. It trades about 0.0 of its potential returns per unit of risk. Biofrontera is currently generating about -0.04 per unit of risk. If you would invest  264.00  in Procaps Group SA on December 23, 2024 and sell it today you would lose (117.00) from holding Procaps Group SA or give up 44.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Procaps Group SA  vs.  Biofrontera

Procaps Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Procaps Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Procaps Group is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Biofrontera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biofrontera has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Procaps Group and Biofrontera

The main advantage of trading using opposite Procaps Group and Biofrontera positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procaps Group 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 Procaps Group SA 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.