Correlation Between Pharming Group and Avantium Holding
Can any of the company-specific risk be diversified away by investing in both Pharming Group and Avantium Holding 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 Pharming Group and Avantium Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pharming Group NV and Avantium Holding BV, you can compare the effects of market volatilities on Pharming Group and Avantium Holding 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 Pharming Group with a short position of Avantium Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharming Group and Avantium Holding.
Diversification Opportunities for Pharming Group and Avantium Holding
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pharming and Avantium is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pharming Group NV and Avantium Holding BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantium Holding and Pharming Group 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 Pharming Group NV are associated (or correlated) with Avantium Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantium Holding has no effect on the direction of Pharming Group i.e., Pharming Group and Avantium Holding go up and down completely randomly.
Pair Corralation between Pharming Group and Avantium Holding
Assuming the 90 days trading horizon Pharming Group NV is expected to under-perform the Avantium Holding. But the stock apears to be less risky and, when comparing its historical volatility, Pharming Group NV is 1.14 times less risky than Avantium Holding. The stock trades about -0.02 of its potential returns per unit of risk. The Avantium Holding BV is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 312.00 in Avantium Holding BV on August 27, 2024 and sell it today you would lose (95.00) from holding Avantium Holding BV or give up 30.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pharming Group NV vs. Avantium Holding BV
Performance |
| Timeline |
| Pharming Group NV |
| Avantium Holding |
Pharming Group and Avantium Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pharming Group and Avantium Holding
The main advantage of trading using opposite Pharming Group and Avantium Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pharming Group position performs unexpectedly, Avantium Holding 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 Avantium Holding will offset losses from the drop in Avantium Holding's long position.| Pharming Group vs. Galapagos NV | Pharming Group vs. Koninklijke BAM Groep | Pharming Group vs. Fugro NV | Pharming Group vs. PostNL NV |
| Avantium Holding vs. Pharming Group NV | Avantium Holding vs. AMG Advanced Metallurgical | Avantium Holding vs. Corbion NV | Avantium Holding vs. Alfen Beheer BV |
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 CEOs Directory module to screen CEOs from public companies around the world.
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