Correlation Between Fidus Investment and Vifor Pharma

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

By analyzing existing cross correlation between Fidus Investment Corp and Vifor Pharma AG, you can compare the effects of market volatilities on Fidus Investment and Vifor Pharma 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 Fidus Investment with a short position of Vifor Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidus Investment and Vifor Pharma.

Diversification Opportunities for Fidus Investment and Vifor Pharma

0.07

Correlation Coefficient

Fidus Investment  Vifor Pharma

Significant diversification

The 3 months correlation between Fidus and Vifor is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Vifor Pharma AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vifor Pharma AG and Fidus Investment 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 Fidus Investment Corp are associated (or correlated) with Vifor Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vifor Pharma AG has no effect on the direction of Fidus Investment i.e., Fidus Investment and Vifor Pharma go up and down completely randomly.

Pair Corralation between Fidus Investment and Vifor Pharma

Given the investment horizon of 90 days Fidus Investment is expected to generate 1.95 times less return on investment than Vifor Pharma. But when comparing it to its historical volatility, Fidus Investment Corp is 2.79 times less risky than Vifor Pharma. It trades about 0.09 of its potential returns per unit of risk. Vifor Pharma AG is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,480  in Vifor Pharma AG on June 21, 2024 and sell it today you would earn a total of  359.00  from holding Vifor Pharma AG or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	14.78%
Values	Daily Returns

Fidus Investment Corp  vs.  Vifor Pharma AG

Fidus Investment Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fidus Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Vifor Pharma AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fidus Investment and Vifor Pharma

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

The idea behind Fidus Investment Corp and Vifor Pharma AG 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.