Correlation Between State Trading and Beta Drugs

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

By analyzing existing cross correlation between The State Trading and Beta Drugs, you can compare the effects of market volatilities on State Trading and Beta Drugs 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 State Trading with a short position of Beta Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Trading and Beta Drugs.

Diversification Opportunities for State Trading and Beta Drugs

-0.17

Correlation Coefficient

State Trading  Beta Drugs

Good diversification

The 3 months correlation between State and Beta is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The State Trading and Beta Drugs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beta Drugs and State Trading 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 The State Trading are associated (or correlated) with Beta Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beta Drugs has no effect on the direction of State Trading i.e., State Trading and Beta Drugs go up and down completely randomly.

Pair Corralation between State Trading and Beta Drugs

Assuming the 90 days trading horizon The State Trading is expected to under-perform the Beta Drugs. In addition to that, State Trading is 1.14 times more volatile than Beta Drugs. It trades about -0.06 of its total potential returns per unit of risk. Beta Drugs is currently generating about 0.11 per unit of volatility. If you would invest  169,995  in Beta Drugs on September 22, 2024 and sell it today you would earn a total of  36,010  from holding Beta Drugs or generate 21.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

The State Trading  vs.  Beta Drugs

State Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Beta Drugs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beta Drugs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Beta Drugs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Trading and Beta Drugs

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

The idea behind The State Trading and Beta Drugs 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..