Correlation Between SPORT LISBOA and Phibro Animal

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

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

Diversification Opportunities for SPORT LISBOA and Phibro Animal

0.77

Correlation Coefficient

SPORT LISBOA  Phibro Animal

Poor diversification

The 3 months correlation between SPORT and Phibro is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E 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 SPORT LISBOA 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 SPORT LISBOA E 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 SPORT LISBOA i.e., SPORT LISBOA and Phibro Animal go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Phibro Animal

Assuming the 90 days horizon SPORT LISBOA is expected to generate 1.31 times less return on investment than Phibro Animal. In addition to that, SPORT LISBOA is 1.26 times more volatile than Phibro Animal Health. It trades about 0.17 of its total potential returns per unit of risk. Phibro Animal Health is currently generating about 0.28 per unit of volatility. If you would invest  1,493  in Phibro Animal Health on April 23, 2025 and sell it today you would earn a total of  1,047  from holding Phibro Animal Health or generate 70.13% return on investment over 90 days.

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

SPORT LISBOA E  vs.  Phibro Animal Health

SPORT LISBOA E

Risk-Adjusted Performance

Good

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

Phibro Animal Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Phibro Animal Health are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Phibro Animal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPORT LISBOA and Phibro Animal

The main advantage of trading using opposite SPORT LISBOA and Phibro Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA 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 SPORT LISBOA E 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.