Correlation Between Pharma Mar and Audax Renovables

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

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

Diversification Opportunities for Pharma Mar and Audax Renovables

-0.71

Correlation Coefficient

Pharma Mar  Audax Renovables

Pay attention - limited upside

The 3 months correlation between Pharma and Audax is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pharma Mar SA and Audax Renovables SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audax Renovables and Pharma Mar 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 Pharma Mar SA are associated (or correlated) with Audax Renovables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audax Renovables has no effect on the direction of Pharma Mar i.e., Pharma Mar and Audax Renovables go up and down completely randomly.

Pair Corralation between Pharma Mar and Audax Renovables

Assuming the 90 days trading horizon Pharma Mar SA is expected to generate 2.94 times more return on investment than Audax Renovables. However, Pharma Mar is 2.94 times more volatile than Audax Renovables SA. It trades about 0.25 of its potential returns per unit of risk. Audax Renovables SA is currently generating about -0.09 per unit of risk. If you would invest  4,136  in Pharma Mar SA on September 5, 2024 and sell it today you would earn a total of  4,029  from holding Pharma Mar SA or generate 97.41% return on investment over 90 days.

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

Pharma Mar SA  vs.  Audax Renovables SA

Pharma Mar SA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pharma Mar SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Pharma Mar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Audax Renovables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Audax Renovables SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Pharma Mar and Audax Renovables

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

The idea behind Pharma Mar SA and Audax Renovables SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.