Correlation Between NewAmsterdam Pharma and Gain Therapeutics
Can any of the company-specific risk be diversified away by investing in both NewAmsterdam Pharma and Gain Therapeutics 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 Gain Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NewAmsterdam Pharma and Gain Therapeutics, you can compare the effects of market volatilities on NewAmsterdam Pharma and Gain Therapeutics 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 Gain Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewAmsterdam Pharma and Gain Therapeutics.
Diversification Opportunities for NewAmsterdam Pharma and Gain Therapeutics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NewAmsterdam and Gain is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NewAmsterdam Pharma and Gain Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gain Therapeutics 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 Gain Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gain Therapeutics has no effect on the direction of NewAmsterdam Pharma i.e., NewAmsterdam Pharma and Gain Therapeutics go up and down completely randomly.
Pair Corralation between NewAmsterdam Pharma and Gain Therapeutics
Assuming the 90 days horizon NewAmsterdam Pharma is expected to generate 1.62 times more return on investment than Gain Therapeutics. However, NewAmsterdam Pharma is 1.62 times more volatile than Gain Therapeutics. It trades about 0.1 of its potential returns per unit of risk. Gain Therapeutics is currently generating about 0.0 per unit of risk. If you would invest 80.00 in NewAmsterdam Pharma on August 29, 2024 and sell it today you would earn a total of 873.00 from holding NewAmsterdam Pharma or generate 1091.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NewAmsterdam Pharma vs. Gain Therapeutics
Performance |
| Timeline |
| NewAmsterdam Pharma |
| Gain Therapeutics |
NewAmsterdam Pharma and Gain Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NewAmsterdam Pharma and Gain Therapeutics
The main advantage of trading using opposite NewAmsterdam Pharma and Gain Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NewAmsterdam Pharma position performs unexpectedly, Gain Therapeutics 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 Gain Therapeutics will offset losses from the drop in Gain Therapeutics' long position.| NewAmsterdam Pharma vs. NewAmsterdam Pharma | NewAmsterdam Pharma vs. Scilex Holding | NewAmsterdam Pharma vs. OmniAb Inc |
| Gain Therapeutics vs. Biovie Inc | Gain Therapeutics vs. In8bio Inc | Gain Therapeutics vs. NewAmsterdam Pharma | Gain Therapeutics vs. Cue Biopharma |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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