Correlation Between Pharma Mar and Making Science

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

By analyzing existing cross correlation between Pharma Mar SA and Making Science Group, you can compare the effects of market volatilities on Pharma Mar and Making Science 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 Pharma Mar with a short position of Making Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharma Mar and Making Science.

Diversification Opportunities for Pharma Mar and Making Science

0.76

Correlation Coefficient

Pharma Mar  Making Science

Poor diversification

The 3 months correlation between Pharma and Making is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pharma Mar SA and Making Science Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Making Science Group and Pharma Mar 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 Pharma Mar SA are associated (or correlated) with Making Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Making Science Group has no effect on the direction of Pharma Mar i.e., Pharma Mar and Making Science go up and down completely randomly.

Pair Corralation between Pharma Mar and Making Science

Assuming the 90 days trading horizon Pharma Mar SA is expected to generate 2.37 times more return on investment than Making Science. However, Pharma Mar is 2.37 times more volatile than Making Science Group. It trades about 0.02 of its potential returns per unit of risk. Making Science Group is currently generating about 0.01 per unit of risk. If you would invest  8,030  in Pharma Mar SA on April 24, 2025 and sell it today you would earn a total of  95.00  from holding Pharma Mar SA or generate 1.18% return on investment over 90 days.

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

Pharma Mar SA  vs.  Making Science Group

Pharma Mar SA

Risk-Adjusted Performance

Weak

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

Making Science Group

Risk-Adjusted Performance

Weak

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

Pair Trading with Pharma Mar and Making Science

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

The idea behind Pharma Mar SA and Making Science Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.