Correlation Between Hydratec Industries and Pharming Group
Can any of the company-specific risk be diversified away by investing in both Hydratec Industries 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 Hydratec Industries and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hydratec Industries NV and Pharming Group NV, you can compare the effects of market volatilities on Hydratec Industries 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 Hydratec Industries with a short position of Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hydratec Industries and Pharming Group.
Diversification Opportunities for Hydratec Industries and Pharming Group
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hydratec and Pharming is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hydratec Industries NV 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 Hydratec Industries 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 Hydratec Industries NV 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 Hydratec Industries i.e., Hydratec Industries and Pharming Group go up and down completely randomly.
Pair Corralation between Hydratec Industries and Pharming Group
Assuming the 90 days trading horizon Hydratec Industries NV is expected to generate 0.34 times more return on investment than Pharming Group. However, Hydratec Industries NV is 2.97 times less risky than Pharming Group. It trades about 0.11 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.12 per unit of risk. If you would invest 15,700 in Hydratec Industries NV on August 28, 2024 and sell it today you would earn a total of 300.00 from holding Hydratec Industries NV or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hydratec Industries NV vs. Pharming Group NV
Performance |
| Timeline |
| Hydratec Industries |
| Pharming Group NV |
Hydratec Industries and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hydratec Industries and Pharming Group
The main advantage of trading using opposite Hydratec Industries and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hydratec Industries 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.| Hydratec Industries vs. Pharming Group NV | Hydratec Industries vs. AMG Advanced Metallurgical | Hydratec Industries vs. BE Semiconductor Industries |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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