Correlation Between Aerostar Bacau and Antibiotice

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

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

Diversification Opportunities for Aerostar Bacau and Antibiotice

-0.67

Correlation Coefficient

Aerostar Bacau  Antibiotice

Excellent diversification

The 3 months correlation between Aerostar and Antibiotice is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aerostar Bacau and Antibiotice Ia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antibiotice Ia and Aerostar Bacau 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 Aerostar Bacau are associated (or correlated) with Antibiotice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antibiotice Ia has no effect on the direction of Aerostar Bacau i.e., Aerostar Bacau and Antibiotice go up and down completely randomly.

Pair Corralation between Aerostar Bacau and Antibiotice

Assuming the 90 days trading horizon Aerostar Bacau is expected to generate 2.62 times less return on investment than Antibiotice. But when comparing it to its historical volatility, Aerostar Bacau is 1.2 times less risky than Antibiotice. It trades about 0.08 of its potential returns per unit of risk. Antibiotice Ia is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  313.00  in Antibiotice Ia on August 23, 2024 and sell it today you would earn a total of  16.00  from holding Antibiotice Ia or generate 5.11% return on investment over 90 days.

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

Aerostar Bacau  vs.  Antibiotice Ia

Aerostar Bacau

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aerostar Bacau has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Antibiotice Ia

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Antibiotice Ia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Antibiotice displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aerostar Bacau and Antibiotice

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

The idea behind Aerostar Bacau and Antibiotice Ia 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.