Correlation Between Biofarm Bucure and Mecanica Fina

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

By analyzing existing cross correlation between Biofarm Bucure and Mecanica Fina SA, you can compare the effects of market volatilities on Biofarm Bucure and Mecanica Fina 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 Biofarm Bucure with a short position of Mecanica Fina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofarm Bucure and Mecanica Fina.

Diversification Opportunities for Biofarm Bucure and Mecanica Fina

0.49

Correlation Coefficient

Biofarm Bucure  Mecanica Fina

Very weak diversification

The 3 months correlation between Biofarm and Mecanica is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Biofarm Bucure and Mecanica Fina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mecanica Fina SA and Biofarm Bucure 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 Biofarm Bucure are associated (or correlated) with Mecanica Fina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mecanica Fina SA has no effect on the direction of Biofarm Bucure i.e., Biofarm Bucure and Mecanica Fina go up and down completely randomly.

Pair Corralation between Biofarm Bucure and Mecanica Fina

Assuming the 90 days trading horizon Biofarm Bucure is expected to generate 0.5 times more return on investment than Mecanica Fina. However, Biofarm Bucure is 2.02 times less risky than Mecanica Fina. It trades about -0.14 of its potential returns per unit of risk. Mecanica Fina SA is currently generating about -0.15 per unit of risk. If you would invest  78.00  in Biofarm Bucure on September 5, 2024 and sell it today you would lose (7.00) from holding Biofarm Bucure or give up 8.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Biofarm Bucure  vs.  Mecanica Fina SA

Biofarm Bucure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biofarm Bucure 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.

Mecanica Fina SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mecanica Fina SA 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.

Pair Trading with Biofarm Bucure and Mecanica Fina

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

The idea behind Biofarm Bucure and Mecanica Fina SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.