Correlation Between Remarul 16 and Biofarm Bucure

Can any of the company-specific risk be diversified away by investing in both Remarul 16 and Biofarm Bucure 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 Remarul 16 and Biofarm Bucure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Remarul 16 Februarie and Biofarm Bucure, you can compare the effects of market volatilities on Remarul 16 and Biofarm Bucure 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 Remarul 16 with a short position of Biofarm Bucure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Remarul 16 and Biofarm Bucure.

Diversification Opportunities for Remarul 16 and Biofarm Bucure

0.68

Correlation Coefficient

Remarul 16  Biofarm Bucure

Poor diversification

The 3 months correlation between Remarul and Biofarm is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Remarul 16 Februarie and Biofarm Bucure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofarm Bucure and Remarul 16 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 Remarul 16 Februarie are associated (or correlated) with Biofarm Bucure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofarm Bucure has no effect on the direction of Remarul 16 i.e., Remarul 16 and Biofarm Bucure go up and down completely randomly.

Pair Corralation between Remarul 16 and Biofarm Bucure

Assuming the 90 days trading horizon Remarul 16 Februarie is expected to under-perform the Biofarm Bucure. But the stock apears to be less risky and, when comparing its historical volatility, Remarul 16 Februarie is 1.57 times less risky than Biofarm Bucure. The stock trades about -0.17 of its potential returns per unit of risk. The Biofarm Bucure is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Biofarm Bucure on December 1, 2024 and sell it today you would lose (4.00) from holding Biofarm Bucure or give up 5.41% of portfolio value over 90 days.

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

Remarul 16 Februarie  vs.  Biofarm Bucure

Remarul 16 Februarie

Risk-Adjusted Performance

Very Weak

Over the last 90 days Remarul 16 Februarie has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Biofarm Bucure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biofarm Bucure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Biofarm Bucure is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Remarul 16 and Biofarm Bucure

The main advantage of trading using opposite Remarul 16 and Biofarm Bucure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Remarul 16 position performs unexpectedly, Biofarm Bucure 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 Biofarm Bucure will offset losses from the drop in Biofarm Bucure's long position.

The idea behind Remarul 16 Februarie and Biofarm Bucure 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.