Correlation Between CuraScientific and Pharmadrug

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

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

Diversification Opportunities for CuraScientific and Pharmadrug

0.09

Correlation Coefficient

CuraScientific  Pharmadrug

Significant diversification

The 3 months correlation between CuraScientific and Pharmadrug is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CuraScientific and Pharmadrug in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmadrug and CuraScientific 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 CuraScientific are associated (or correlated) with Pharmadrug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmadrug has no effect on the direction of CuraScientific i.e., CuraScientific and Pharmadrug go up and down completely randomly.

Pair Corralation between CuraScientific and Pharmadrug

If you would invest  1.51  in Pharmadrug on September 12, 2024 and sell it today you would lose (0.49) from holding Pharmadrug or give up 32.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

CuraScientific  vs.  Pharmadrug

CuraScientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CuraScientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CuraScientific is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pharmadrug

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pharmadrug are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Pharmadrug reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CuraScientific and Pharmadrug

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

The idea behind CuraScientific and Pharmadrug 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.