Correlation Between Phibro Animal and Sohm

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

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

Diversification Opportunities for Phibro Animal and Sohm

0.14

Correlation Coefficient

Phibro Animal  Sohm

Average diversification

The 3 months correlation between Phibro and Sohm is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Phibro Animal Health and Sohm Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sohm Inc and Phibro Animal 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 Phibro Animal Health are associated (or correlated) with Sohm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sohm Inc has no effect on the direction of Phibro Animal i.e., Phibro Animal and Sohm go up and down completely randomly.

Pair Corralation between Phibro Animal and Sohm

If you would invest  2,110  in Phibro Animal Health on September 12, 2024 and sell it today you would earn a total of  286.00  from holding Phibro Animal Health or generate 13.55% return on investment over 90 days.

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

Phibro Animal Health  vs.  Sohm Inc

Phibro Animal Health

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical indicators, Phibro Animal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sohm Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sohm Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Sohm is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Phibro Animal and Sohm

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

The idea behind Phibro Animal Health and Sohm Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.