Correlation Between Banco De and Supernus Pharmaceuticals

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

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

Diversification Opportunities for Banco De and Supernus Pharmaceuticals

-0.67

Correlation Coefficient

Banco De  Supernus Pharmaceuticals

Excellent diversification

The 3 months correlation between Banco and Supernus is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Banco De Chile and Supernus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernus Pharmaceuticals and Banco De 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 Banco De Chile are associated (or correlated) with Supernus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernus Pharmaceuticals has no effect on the direction of Banco De i.e., Banco De and Supernus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Banco De and Supernus Pharmaceuticals

Considering the 90-day investment horizon Banco De Chile is expected to under-perform the Supernus Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Banco De Chile is 1.74 times less risky than Supernus Pharmaceuticals. The stock trades about -0.12 of its potential returns per unit of risk. The Supernus Pharmaceuticals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,471  in Supernus Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  228.00  from holding Supernus Pharmaceuticals or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Banco De Chile  vs.  Supernus Pharmaceuticals

Banco De Chile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banco De Chile has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Supernus Pharmaceuticals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Supernus Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Supernus Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Banco De and Supernus Pharmaceuticals

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

The idea behind Banco De Chile and Supernus Pharmaceuticals 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.