Correlation Between Galmed Pharmaceuticals and Adverum Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Galmed Pharmaceuticals and Adverum Biotechnologies 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 Galmed Pharmaceuticals and Adverum Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Galmed Pharmaceuticals and Adverum Biotechnologies, you can compare the effects of market volatilities on Galmed Pharmaceuticals and Adverum Biotechnologies 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 Galmed Pharmaceuticals with a short position of Adverum Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galmed Pharmaceuticals and Adverum Biotechnologies.
Diversification Opportunities for Galmed Pharmaceuticals and Adverum Biotechnologies
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Galmed and Adverum is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Galmed Pharmaceuticals and Adverum Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adverum Biotechnologies and Galmed Pharmaceuticals 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 Galmed Pharmaceuticals are associated (or correlated) with Adverum Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adverum Biotechnologies has no effect on the direction of Galmed Pharmaceuticals i.e., Galmed Pharmaceuticals and Adverum Biotechnologies go up and down completely randomly.
Pair Corralation between Galmed Pharmaceuticals and Adverum Biotechnologies
Given the investment horizon of 90 days Galmed Pharmaceuticals is expected to generate 6.07 times more return on investment than Adverum Biotechnologies. However, Galmed Pharmaceuticals is 6.07 times more volatile than Adverum Biotechnologies. It trades about 0.04 of its potential returns per unit of risk. Adverum Biotechnologies is currently generating about -0.15 per unit of risk. If you would invest 476.00 in Galmed Pharmaceuticals on August 27, 2024 and sell it today you would lose (201.00) from holding Galmed Pharmaceuticals or give up 42.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Galmed Pharmaceuticals vs. Adverum Biotechnologies
Performance |
| Timeline |
| Galmed Pharmaceuticals |
| Adverum Biotechnologies |
Galmed Pharmaceuticals and Adverum Biotechnologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Galmed Pharmaceuticals and Adverum Biotechnologies
The main advantage of trading using opposite Galmed Pharmaceuticals and Adverum Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Galmed Pharmaceuticals position performs unexpectedly, Adverum Biotechnologies 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 Adverum Biotechnologies will offset losses from the drop in Adverum Biotechnologies' long position.| Galmed Pharmaceuticals vs. Affimed NV | Galmed Pharmaceuticals vs. Abeona Therapeutics | Galmed Pharmaceuticals vs. Akebia Ther | Galmed Pharmaceuticals vs. Kodiak Sciences |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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