Correlation Between CareMax and Pharma Bio

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

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

Diversification Opportunities for CareMax and Pharma Bio

0.68

Correlation Coefficient

CareMax  Pharma Bio

Poor diversification

The 3 months correlation between CareMax and Pharma is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CareMax and Pharma Bio Serv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharma Bio Serv and CareMax 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 CareMax are associated (or correlated) with Pharma Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharma Bio Serv has no effect on the direction of CareMax i.e., CareMax and Pharma Bio go up and down completely randomly.

Pair Corralation between CareMax and Pharma Bio

Given the investment horizon of 90 days CareMax is expected to under-perform the Pharma Bio. In addition to that, CareMax is 1.89 times more volatile than Pharma Bio Serv. It trades about -0.35 of its total potential returns per unit of risk. Pharma Bio Serv is currently generating about 0.08 per unit of volatility. If you would invest  51.00  in Pharma Bio Serv on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Pharma Bio Serv or generate 7.84% return on investment over 90 days.

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

CareMax  vs.  Pharma Bio Serv

CareMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pharma Bio Serv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharma Bio Serv has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pharma Bio is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with CareMax and Pharma Bio

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

The idea behind CareMax and Pharma Bio Serv 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.