Correlation Between Uzinexport and Biofarm Bucure

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

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

Diversification Opportunities for Uzinexport and Biofarm Bucure

0.37

Correlation Coefficient

Uzinexport  Biofarm Bucure

Weak diversification

The 3 months correlation between Uzinexport and Biofarm is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Uzinexport SA and Biofarm Bucure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofarm Bucure and Uzinexport 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 Uzinexport SA are associated (or correlated) with Biofarm Bucure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofarm Bucure has no effect on the direction of Uzinexport i.e., Uzinexport and Biofarm Bucure go up and down completely randomly.

Pair Corralation between Uzinexport and Biofarm Bucure

Assuming the 90 days trading horizon Uzinexport SA is expected to generate 5.57 times more return on investment than Biofarm Bucure. However, Uzinexport is 5.57 times more volatile than Biofarm Bucure. It trades about -0.01 of its potential returns per unit of risk. Biofarm Bucure is currently generating about -0.08 per unit of risk. If you would invest  56.00  in Uzinexport SA on September 12, 2024 and sell it today you would lose (8.00) from holding Uzinexport SA or give up 14.29% of portfolio value over 90 days.

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

Uzinexport SA  vs.  Biofarm Bucure

Uzinexport SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Biofarm Bucure

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Uzinexport and Biofarm Bucure

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

The idea behind Uzinexport SA and Biofarm Bucure 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.