Correlation Between Farmaceutica and Fondul Deschis

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

By analyzing existing cross correlation between Farmaceutica R and Fondul Deschis De, you can compare the effects of market volatilities on Farmaceutica and Fondul Deschis 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 Fondul Deschis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmaceutica and Fondul Deschis.

Diversification Opportunities for Farmaceutica and Fondul Deschis

0.81

Correlation Coefficient

Farmaceutica  Fondul Deschis

Very poor diversification

The 3 months correlation between Farmaceutica and Fondul is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Farmaceutica R and Fondul Deschis De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fondul Deschis De 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 Fondul Deschis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fondul Deschis De has no effect on the direction of Farmaceutica i.e., Farmaceutica and Fondul Deschis go up and down completely randomly.

Pair Corralation between Farmaceutica and Fondul Deschis

Assuming the 90 days trading horizon Farmaceutica R is expected to under-perform the Fondul Deschis. In addition to that, Farmaceutica is 1.81 times more volatile than Fondul Deschis De. It trades about -0.04 of its total potential returns per unit of risk. Fondul Deschis De is currently generating about -0.05 per unit of volatility. If you would invest  2,870  in Fondul Deschis De on September 27, 2024 and sell it today you would lose (183.00) from holding Fondul Deschis De or give up 6.38% of portfolio value over 90 days.

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

Farmaceutica R  vs.  Fondul Deschis De

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.

Fondul Deschis De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fondul Deschis De has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fondul Deschis is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Farmaceutica and Fondul Deschis

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

The idea behind Farmaceutica R and Fondul Deschis De 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.