Correlation Between NewAmsterdam Pharma and Fennec Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both NewAmsterdam Pharma and Fennec Pharmaceuticals 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 NewAmsterdam Pharma and Fennec Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewAmsterdam Pharma and Fennec Pharmaceuticals, you can compare the effects of market volatilities on NewAmsterdam Pharma and Fennec Pharmaceuticals 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 NewAmsterdam Pharma with a short position of Fennec Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewAmsterdam Pharma and Fennec Pharmaceuticals.
Diversification Opportunities for NewAmsterdam Pharma and Fennec Pharmaceuticals
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NewAmsterdam and Fennec is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding NewAmsterdam Pharma and Fennec Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fennec Pharmaceuticals and NewAmsterdam Pharma 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 NewAmsterdam Pharma are associated (or correlated) with Fennec Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fennec Pharmaceuticals has no effect on the direction of NewAmsterdam Pharma i.e., NewAmsterdam Pharma and Fennec Pharmaceuticals go up and down completely randomly.
Pair Corralation between NewAmsterdam Pharma and Fennec Pharmaceuticals
Given the investment horizon of 90 days NewAmsterdam Pharma is expected to generate 1.97 times less return on investment than Fennec Pharmaceuticals. But when comparing it to its historical volatility, NewAmsterdam Pharma is 1.03 times less risky than Fennec Pharmaceuticals. It trades about 0.16 of its potential returns per unit of risk. Fennec Pharmaceuticals is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 436.00 in Fennec Pharmaceuticals on September 1, 2024 and sell it today you would earn a total of 170.00 from holding Fennec Pharmaceuticals or generate 38.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewAmsterdam Pharma vs. Fennec Pharmaceuticals
Performance |
| Timeline |
| NewAmsterdam Pharma |
| Fennec Pharmaceuticals |
NewAmsterdam Pharma and Fennec Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewAmsterdam Pharma and Fennec Pharmaceuticals
The main advantage of trading using opposite NewAmsterdam Pharma and Fennec Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewAmsterdam Pharma position performs unexpectedly, Fennec Pharmaceuticals 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 Fennec Pharmaceuticals will offset losses from the drop in Fennec Pharmaceuticals' long position.| NewAmsterdam Pharma vs. Monte Rosa Therapeutics | NewAmsterdam Pharma vs. Inventiva Sa | NewAmsterdam Pharma vs. Cullinan Oncology LLC | NewAmsterdam Pharma vs. Compass Therapeutics |
| Fennec Pharmaceuticals vs. Molecular Partners AG | Fennec Pharmaceuticals vs. MediciNova | Fennec Pharmaceuticals vs. Anebulo Pharmaceuticals | Fennec Pharmaceuticals vs. Champions Oncology |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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