Correlation Between Pharmacielo and Bionoid Pharma

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

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

Diversification Opportunities for Pharmacielo and Bionoid Pharma

0.4

Correlation Coefficient

Pharmacielo  Bionoid Pharma

Very weak diversification

The 3 months correlation between Pharmacielo and Bionoid is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pharmacielo and Bionoid Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionoid Pharma and Pharmacielo 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 Pharmacielo are associated (or correlated) with Bionoid Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionoid Pharma has no effect on the direction of Pharmacielo i.e., Pharmacielo and Bionoid Pharma go up and down completely randomly.

Pair Corralation between Pharmacielo and Bionoid Pharma

Assuming the 90 days horizon Pharmacielo is expected to under-perform the Bionoid Pharma. But the pink sheet apears to be less risky and, when comparing its historical volatility, Pharmacielo is 1.7 times less risky than Bionoid Pharma. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Bionoid Pharma is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Bionoid Pharma on September 24, 2024 and sell it today you would earn a total of  11.00  from holding Bionoid Pharma or generate 55.0% return on investment over 90 days.

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

Pharmacielo  vs.  Bionoid Pharma

Pharmacielo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bionoid Pharma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bionoid Pharma are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Bionoid Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pharmacielo and Bionoid Pharma

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

The idea behind Pharmacielo and Bionoid Pharma 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.