Correlation Between Biofil Chemicals and First Majestic

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

By analyzing existing cross correlation between Biofil Chemicals Pharmaceuticals and First Majestic Silver, you can compare the effects of market volatilities on Biofil Chemicals and First Majestic 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 Biofil Chemicals with a short position of First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biofil Chemicals and First Majestic.

Diversification Opportunities for Biofil Chemicals and First Majestic

0.09

Correlation Coefficient

Biofil Chemicals  First Majestic

Significant diversification

The 3 months correlation between Biofil and First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Biofil Chemicals Pharmaceutica and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver and Biofil Chemicals 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 Biofil Chemicals Pharmaceuticals are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Biofil Chemicals i.e., Biofil Chemicals and First Majestic go up and down completely randomly.

Pair Corralation between Biofil Chemicals and First Majestic

Assuming the 90 days trading horizon Biofil Chemicals Pharmaceuticals is expected to generate 0.92 times more return on investment than First Majestic. However, Biofil Chemicals Pharmaceuticals is 1.09 times less risky than First Majestic. It trades about 0.02 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.01 per unit of risk. If you would invest  5,955  in Biofil Chemicals Pharmaceuticals on February 4, 2024 and sell it today you would earn a total of  800.00  from holding Biofil Chemicals Pharmaceuticals or generate 13.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.38%
Values	Daily Returns

Biofil Chemicals Pharmaceutica  vs.  First Majestic Silver

Biofil Chemicals Pha

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biofil Chemicals Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Biofil Chemicals is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

First Majestic Silver

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Majestic Silver are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, First Majestic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biofil Chemicals and First Majestic

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

The idea behind Biofil Chemicals Pharmaceuticals and First Majestic Silver 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.