Correlation Between AmerisourceBergen and Simulations Plus

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

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

Diversification Opportunities for AmerisourceBergen and Simulations Plus

0.28

Correlation Coefficient

AmerisourceBergen  Simulations Plus

Modest diversification

The 3 months correlation between AmerisourceBergen and Simulations is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding AmerisourceBergen and Simulations Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simulations Plus and AmerisourceBergen 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 AmerisourceBergen are associated (or correlated) with Simulations Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simulations Plus has no effect on the direction of AmerisourceBergen i.e., AmerisourceBergen and Simulations Plus go up and down completely randomly.

Pair Corralation between AmerisourceBergen and Simulations Plus

If you would invest  4,162  in Simulations Plus on January 24, 2024 and sell it today you would earn a total of  338.00  from holding Simulations Plus or generate 8.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

AmerisourceBergen  vs.  Simulations Plus

AmerisourceBergen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AmerisourceBergen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, AmerisourceBergen is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Simulations Plus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simulations Plus are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Simulations Plus reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AmerisourceBergen and Simulations Plus

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

The idea behind AmerisourceBergen and Simulations Plus 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.