Correlation Between CSL and Pharming Group
Can any of the company-specific risk be diversified away by investing in both CSL and Pharming Group 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 CSL and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Pharming Group NV, you can compare the effects of market volatilities on CSL and Pharming Group 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 CSL with a short position of Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Pharming Group.
Diversification Opportunities for CSL and Pharming Group
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSL and Pharming is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV and CSL 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 CSL are associated (or correlated) with Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of CSL i.e., CSL and Pharming Group go up and down completely randomly.
Pair Corralation between CSL and Pharming Group
Assuming the 90 days horizon CSL is expected to under-perform the Pharming Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, CSL is 1.12 times less risky than Pharming Group. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Pharming Group NV is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 94.00 in Pharming Group NV on October 23, 2024 and sell it today you would lose (1.00) from holding Pharming Group NV or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
CSL vs. Pharming Group NV
Performance |
| Timeline |
| CSL |
| Pharming Group NV |
CSL and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Pharming Group
The main advantage of trading using opposite CSL and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Pharming Group 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 Pharming Group will offset losses from the drop in Pharming Group's long position.| CSL vs. Novo Nordisk AS | CSL vs. ACELYRIN, INC Common | CSL vs. Caribou Biosciences | CSL vs. Molecular Partners AG |
| Pharming Group vs. Garibaldi Resources Corp | Pharming Group vs. IGG Inc | Pharming Group vs. Sino Biopharmaceutical Limited |
Check out your portfolio center.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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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