Correlation Between IGG and Pharming Group
Can any of the company-specific risk be diversified away by investing in both IGG 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 IGG and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGG Inc and Pharming Group NV, you can compare the effects of market volatilities on IGG 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 IGG with a short position of Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGG and Pharming Group.
Diversification Opportunities for IGG and Pharming Group
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between IGG and Pharming is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding IGG Inc 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 IGG 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 IGG Inc 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 IGG i.e., IGG and Pharming Group go up and down completely randomly.
Pair Corralation between IGG and Pharming Group
Assuming the 90 days horizon IGG Inc is expected to generate 3.66 times more return on investment than Pharming Group. However, IGG is 3.66 times more volatile than Pharming Group NV. It trades about 0.05 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.05 per unit of risk. If you would invest 43.00 in IGG Inc on September 3, 2024 and sell it today you would earn a total of 5.00 from holding IGG Inc or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.95% |
| Values | Daily Returns |
IGG Inc vs. Pharming Group NV
Performance |
| Timeline |
| IGG Inc |
| Pharming Group NV |
IGG and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGG and Pharming Group
The main advantage of trading using opposite IGG and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGG 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.The idea behind IGG Inc and Pharming Group NV 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.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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