Correlation Between INC Research and ANI Pharmaceuticals

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

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

Diversification Opportunities for INC Research and ANI Pharmaceuticals

0.34

Correlation Coefficient

INC Research  ANI Pharmaceuticals

Weak diversification

The 3 months correlation between INC and ANI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding INC Research Holdings and ANI Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANI Pharmaceuticals and INC Research 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 INC Research Holdings are associated (or correlated) with ANI Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANI Pharmaceuticals has no effect on the direction of INC Research i.e., INC Research and ANI Pharmaceuticals go up and down completely randomly.

Pair Corralation between INC Research and ANI Pharmaceuticals

Given the investment horizon of 90 days INC Research Holdings is expected to under-perform the ANI Pharmaceuticals. In addition to that, INC Research is 1.86 times more volatile than ANI Pharmaceuticals. It trades about -0.14 of its total potential returns per unit of risk. ANI Pharmaceuticals is currently generating about -0.05 per unit of volatility. If you would invest  6,303  in ANI Pharmaceuticals on September 1, 2024 and sell it today you would lose (580.00) from holding ANI Pharmaceuticals or give up 9.2% of portfolio value over 90 days.

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

INC Research Holdings  vs.  ANI Pharmaceuticals

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ANI Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANI Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with INC Research and ANI Pharmaceuticals

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

The idea behind INC Research Holdings and ANI 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.