Correlation Between Pure Bioscience and Inter Parfums

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

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

Diversification Opportunities for Pure Bioscience and Inter Parfums

-0.37

Correlation Coefficient

Pure Bioscience  Inter Parfums

Very good diversification

The 3 months correlation between Pure and Inter is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Pure Bioscience and Inter Parfums in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inter Parfums and Pure Bioscience 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 Pure Bioscience are associated (or correlated) with Inter Parfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inter Parfums has no effect on the direction of Pure Bioscience i.e., Pure Bioscience and Inter Parfums go up and down completely randomly.

Pair Corralation between Pure Bioscience and Inter Parfums

If you would invest  12,473  in Inter Parfums on September 3, 2024 and sell it today you would earn a total of  1,293  from holding Inter Parfums or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Pure Bioscience  vs.  Inter Parfums

Pure Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

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

Inter Parfums

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inter Parfums are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Inter Parfums may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pure Bioscience and Inter Parfums

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

The idea behind Pure Bioscience and Inter Parfums 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.