Correlation Between Pacira Pharmaceuticals and Phibro Animal

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

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

Diversification Opportunities for Pacira Pharmaceuticals and Phibro Animal

-0.48

Correlation Coefficient

Pacira Pharmaceuticals  Phibro Animal

Very good diversification

The 3 months correlation between Pacira and Phibro is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pacira Pharmaceuticals and Phibro Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phibro Animal Health and Pacira Pharmaceuticals 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 Pacira Pharmaceuticals are associated (or correlated) with Phibro Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phibro Animal Health has no effect on the direction of Pacira Pharmaceuticals i.e., Pacira Pharmaceuticals and Phibro Animal go up and down completely randomly.

Pair Corralation between Pacira Pharmaceuticals and Phibro Animal

Given the investment horizon of 90 days Pacira Pharmaceuticals is expected to under-perform the Phibro Animal. But the stock apears to be less risky and, when comparing its historical volatility, Pacira Pharmaceuticals is 3.11 times less risky than Phibro Animal. The stock trades about -0.21 of its potential returns per unit of risk. The Phibro Animal Health is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,261  in Phibro Animal Health on February 8, 2024 and sell it today you would earn a total of  416.00  from holding Phibro Animal Health or generate 32.99% return on investment over 90 days.

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

Pacira Pharmaceuticals  vs.  Phibro Animal Health

Pacira Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Phibro Animal Health

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Phibro Animal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacira Pharmaceuticals and Phibro Animal

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

The idea behind Pacira Pharmaceuticals and Phibro Animal Health 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..