Correlation Between UBS Group and Harmony Biosciences
Can any of the company-specific risk be diversified away by investing in both UBS Group and Harmony Biosciences 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 UBS Group and Harmony Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and Harmony Biosciences Holdings, you can compare the effects of market volatilities on UBS Group and Harmony Biosciences 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 UBS Group with a short position of Harmony Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Harmony Biosciences.
Diversification Opportunities for UBS Group and Harmony Biosciences
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UBS and Harmony is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Harmony Biosciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Biosciences and UBS 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 UBS Group AG are associated (or correlated) with Harmony Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Biosciences has no effect on the direction of UBS Group i.e., UBS Group and Harmony Biosciences go up and down completely randomly.
Pair Corralation between UBS Group and Harmony Biosciences
Considering the 90-day investment horizon UBS Group AG is expected to generate 0.75 times more return on investment than Harmony Biosciences. However, UBS Group AG is 1.33 times less risky than Harmony Biosciences. It trades about -0.13 of its potential returns per unit of risk. Harmony Biosciences Holdings is currently generating about -0.16 per unit of risk. If you would invest 3,537 in UBS Group AG on November 25, 2024 and sell it today you would lose (190.00) from holding UBS Group AG or give up 5.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
UBS Group AG vs. Harmony Biosciences Holdings
Performance |
Timeline |
UBS Group AG |
Harmony Biosciences |
UBS Group and Harmony Biosciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UBS Group and Harmony Biosciences
The main advantage of trading using opposite UBS Group and Harmony Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group position performs unexpectedly, Harmony Biosciences 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 Harmony Biosciences will offset losses from the drop in Harmony Biosciences' long position.UBS Group vs. Citigroup | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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