Correlation Between Fortress Biotech and Pharmala Biotech

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

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

Diversification Opportunities for Fortress Biotech and Pharmala Biotech

0.12

Correlation Coefficient

Fortress Biotech  Pharmala Biotech

Average diversification

The 3 months correlation between Fortress and Pharmala is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and Pharmala Biotech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmala Biotech Holdings and Fortress Biotech 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 Fortress Biotech Pref are associated (or correlated) with Pharmala Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmala Biotech Holdings has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Pharmala Biotech go up and down completely randomly.

Pair Corralation between Fortress Biotech and Pharmala Biotech

If you would invest  592.00  in Fortress Biotech Pref on September 15, 2024 and sell it today you would earn a total of  106.00  from holding Fortress Biotech Pref or generate 17.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Fortress Biotech Pref  vs.  Pharmala Biotech Holdings

Fortress Biotech Pref

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Pharmala Biotech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharmala Biotech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Pharmala Biotech is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fortress Biotech and Pharmala Biotech

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

The idea behind Fortress Biotech Pref and Pharmala Biotech Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.