Correlation Between Stem Holdings and Pharmacielo

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

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

Diversification Opportunities for Stem Holdings and Pharmacielo

0.0

Correlation Coefficient

Stem Holdings  Pharmacielo

Pay attention - limited upside

The 3 months correlation between Stem and Pharmacielo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Stem Holdings and Pharmacielo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmacielo and Stem Holdings 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 Stem Holdings are associated (or correlated) with Pharmacielo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmacielo has no effect on the direction of Stem Holdings i.e., Stem Holdings and Pharmacielo go up and down completely randomly.

Pair Corralation between Stem Holdings and Pharmacielo

If you would invest  6.40  in Pharmacielo on September 19, 2024 and sell it today you would earn a total of  0.37  from holding Pharmacielo or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Stem Holdings  vs.  Pharmacielo

Stem Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stem Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Stem Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pharmacielo

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pharmacielo are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Pharmacielo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stem Holdings and Pharmacielo

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

The idea behind Stem Holdings and Pharmacielo 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.