Correlation Between Pharma Mar and Laboratorios Farmaceuticos

Can any of the company-specific risk be diversified away by investing in both Pharma Mar and Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos ROVI, you can compare the effects of market volatilities on Pharma Mar and Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharma Mar and Laboratorios Farmaceuticos.

Diversification Opportunities for Pharma Mar and Laboratorios Farmaceuticos

0.44

Correlation Coefficient

Pharma Mar  Laboratorios Farmaceuticos

Very weak diversification

The 3 months correlation between Pharma and Laboratorios is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pharma Mar SA and Laboratorios Farmaceuticos ROV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laboratorios Farmaceuticos 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 Laboratorios Farmaceuticos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laboratorios Farmaceuticos has no effect on the direction of Pharma Mar i.e., Pharma Mar and Laboratorios Farmaceuticos go up and down completely randomly.

Pair Corralation between Pharma Mar and Laboratorios Farmaceuticos

Assuming the 90 days trading horizon Pharma Mar is expected to generate 1.93 times less return on investment than Laboratorios Farmaceuticos. In addition to that, Pharma Mar is 2.58 times more volatile than Laboratorios Farmaceuticos ROVI. It trades about 0.02 of its total potential returns per unit of risk. Laboratorios Farmaceuticos ROVI is currently generating about 0.11 per unit of volatility. If you would invest  5,041  in Laboratorios Farmaceuticos ROVI on April 24, 2025 and sell it today you would earn a total of  399.00  from holding Laboratorios Farmaceuticos ROVI or generate 7.92% return on investment over 90 days.

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

Pharma Mar SA  vs.  Laboratorios Farmaceuticos ROV

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.

Laboratorios Farmaceuticos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratorios Farmaceuticos ROVI are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Laboratorios Farmaceuticos may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Pharma Mar and Laboratorios Farmaceuticos

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

The idea behind Pharma Mar SA and Laboratorios Farmaceuticos ROVI 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.