Correlation Between Turism Felix and Farmaceutica

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

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

Diversification Opportunities for Turism Felix and Farmaceutica

-0.63

Correlation Coefficient

Turism Felix  Farmaceutica

Excellent diversification

The 3 months correlation between Turism and Farmaceutica is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Turism Felix B and Farmaceutica R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmaceutica R and Turism Felix 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 Turism Felix B are associated (or correlated) with Farmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmaceutica R has no effect on the direction of Turism Felix i.e., Turism Felix and Farmaceutica go up and down completely randomly.

Pair Corralation between Turism Felix and Farmaceutica

Assuming the 90 days trading horizon Turism Felix B is expected to generate 1.54 times more return on investment than Farmaceutica. However, Turism Felix is 1.54 times more volatile than Farmaceutica R. It trades about 0.08 of its potential returns per unit of risk. Farmaceutica R is currently generating about -0.1 per unit of risk. If you would invest  30.00  in Turism Felix B on September 1, 2024 and sell it today you would earn a total of  4.00  from holding Turism Felix B or generate 13.33% return on investment over 90 days.

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

Turism Felix B  vs.  Farmaceutica R

Turism Felix B

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turism Felix B are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Turism Felix displayed solid returns over the last few months and may actually be approaching a breakup point.

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 December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Turism Felix and Farmaceutica

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

The idea behind Turism Felix B and Farmaceutica R 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.