Correlation Between Farmaceutica and Santierul Naval

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

By analyzing existing cross correlation between Farmaceutica R and Santierul Naval Orsova, you can compare the effects of market volatilities on Farmaceutica and Santierul Naval 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 Farmaceutica with a short position of Santierul Naval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmaceutica and Santierul Naval.

Diversification Opportunities for Farmaceutica and Santierul Naval

-0.47

Correlation Coefficient

Farmaceutica  Santierul Naval

Very good diversification

The 3 months correlation between Farmaceutica and Santierul is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Farmaceutica R and Santierul Naval Orsova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santierul Naval Orsova and Farmaceutica 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 Farmaceutica R are associated (or correlated) with Santierul Naval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santierul Naval Orsova has no effect on the direction of Farmaceutica i.e., Farmaceutica and Santierul Naval go up and down completely randomly.

Pair Corralation between Farmaceutica and Santierul Naval

Assuming the 90 days trading horizon Farmaceutica R is expected to under-perform the Santierul Naval. In addition to that, Farmaceutica is 1.19 times more volatile than Santierul Naval Orsova. It trades about -0.05 of its total potential returns per unit of risk. Santierul Naval Orsova is currently generating about -0.04 per unit of volatility. If you would invest  730.00  in Santierul Naval Orsova on September 27, 2024 and sell it today you would lose (15.00) from holding Santierul Naval Orsova or give up 2.05% of portfolio value over 90 days.

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

Farmaceutica R  vs.  Santierul Naval Orsova

Farmaceutica R

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farmaceutica R has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Santierul Naval Orsova

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Santierul Naval Orsova are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Santierul Naval may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Farmaceutica and Santierul Naval

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

The idea behind Farmaceutica R and Santierul Naval Orsova 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.