Correlation Between HCW Biologics and NewAmsterdam Pharma
Can any of the company-specific risk be diversified away by investing in both HCW Biologics and NewAmsterdam Pharma 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 HCW Biologics and NewAmsterdam Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HCW Biologics and NewAmsterdam Pharma, you can compare the effects of market volatilities on HCW Biologics and NewAmsterdam Pharma 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 HCW Biologics with a short position of NewAmsterdam Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of HCW Biologics and NewAmsterdam Pharma.
Diversification Opportunities for HCW Biologics and NewAmsterdam Pharma
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HCW and NewAmsterdam is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HCW Biologics and NewAmsterdam Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewAmsterdam Pharma and HCW Biologics 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 HCW Biologics are associated (or correlated) with NewAmsterdam Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewAmsterdam Pharma has no effect on the direction of HCW Biologics i.e., HCW Biologics and NewAmsterdam Pharma go up and down completely randomly.
Pair Corralation between HCW Biologics and NewAmsterdam Pharma
Given the investment horizon of 90 days HCW Biologics is expected to generate 1.73 times less return on investment than NewAmsterdam Pharma. In addition to that, HCW Biologics is 1.92 times more volatile than NewAmsterdam Pharma. It trades about 0.02 of its total potential returns per unit of risk. NewAmsterdam Pharma is currently generating about 0.07 per unit of volatility. If you would invest 196.00 in NewAmsterdam Pharma on November 28, 2024 and sell it today you would earn a total of 604.00 from holding NewAmsterdam Pharma or generate 308.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HCW Biologics vs. NewAmsterdam Pharma
Performance |
| Timeline |
| HCW Biologics |
| NewAmsterdam Pharma |
HCW Biologics and NewAmsterdam Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HCW Biologics and NewAmsterdam Pharma
The main advantage of trading using opposite HCW Biologics and NewAmsterdam Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HCW Biologics position performs unexpectedly, NewAmsterdam Pharma 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 NewAmsterdam Pharma will offset losses from the drop in NewAmsterdam Pharma's long position.| HCW Biologics vs. Anebulo Pharmaceuticals | HCW Biologics vs. Rezolute | HCW Biologics vs. Molecular Partners AG | HCW Biologics vs. MediciNova |
| NewAmsterdam Pharma vs. Beam Therapeutics | NewAmsterdam Pharma vs. Editas Medicine | NewAmsterdam Pharma vs. Caribou Biosciences | NewAmsterdam Pharma vs. Verve Therapeutics |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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