Correlation Between XSpray Pharma and Infant Bacterial

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

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

Diversification Opportunities for XSpray Pharma and Infant Bacterial

-0.17

Correlation Coefficient

XSpray Pharma  Infant Bacterial

Good diversification

The 3 months correlation between XSpray and Infant is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding XSpray Pharma AB and Infant Bacterial Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infant Bacterial and XSpray Pharma 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 XSpray Pharma AB are associated (or correlated) with Infant Bacterial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infant Bacterial has no effect on the direction of XSpray Pharma i.e., XSpray Pharma and Infant Bacterial go up and down completely randomly.

Pair Corralation between XSpray Pharma and Infant Bacterial

Assuming the 90 days trading horizon XSpray Pharma is expected to generate 10.53 times less return on investment than Infant Bacterial. But when comparing it to its historical volatility, XSpray Pharma AB is 2.91 times less risky than Infant Bacterial. It trades about 0.06 of its potential returns per unit of risk. Infant Bacterial Therapeutics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  3,640  in Infant Bacterial Therapeutics on September 13, 2024 and sell it today you would earn a total of  1,380  from holding Infant Bacterial Therapeutics or generate 37.91% return on investment over 90 days.

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

XSpray Pharma AB  vs.  Infant Bacterial Therapeutics

XSpray Pharma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XSpray Pharma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, XSpray Pharma is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Infant Bacterial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infant Bacterial Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Infant Bacterial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XSpray Pharma and Infant Bacterial

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

The idea behind XSpray Pharma AB and Infant Bacterial Therapeutics 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.