Correlation Between Fondul Deschis and Farmaceutica

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

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

Diversification Opportunities for Fondul Deschis and Farmaceutica

0.78

Correlation Coefficient

Fondul Deschis  Farmaceutica

Poor diversification

The 3 months correlation between Fondul and Farmaceutica is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fondul Deschis De and Farmaceutica R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmaceutica R and Fondul Deschis 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 Fondul Deschis De 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 Fondul Deschis i.e., Fondul Deschis and Farmaceutica go up and down completely randomly.

Pair Corralation between Fondul Deschis and Farmaceutica

Assuming the 90 days trading horizon Fondul Deschis De is expected to generate 0.53 times more return on investment than Farmaceutica. However, Fondul Deschis De is 1.9 times less risky than Farmaceutica. It trades about -0.04 of its potential returns per unit of risk. Farmaceutica R is currently generating about -0.06 per unit of risk. If you would invest  2,792  in Fondul Deschis De on October 15, 2024 and sell it today you would lose (80.00) from holding Fondul Deschis De or give up 2.87% of portfolio value over 90 days.

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

Fondul Deschis De  vs.  Farmaceutica R

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.

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 latest unfluctuating 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.

Pair Trading with Fondul Deschis and Farmaceutica

The main advantage of trading using opposite Fondul Deschis and Farmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fondul Deschis 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 Fondul Deschis De 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.