Correlation Between Vincerx Pharma and Harmony Biosciences
Can any of the company-specific risk be diversified away by investing in both Vincerx Pharma 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 Vincerx Pharma and Harmony Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vincerx Pharma and Harmony Biosciences Holdings, you can compare the effects of market volatilities on Vincerx Pharma 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 Vincerx Pharma with a short position of Harmony Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vincerx Pharma and Harmony Biosciences.
Diversification Opportunities for Vincerx Pharma and Harmony Biosciences
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vincerx and Harmony is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vincerx Pharma and Harmony Biosciences Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Biosciences and Vincerx 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 Vincerx Pharma 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 Vincerx Pharma i.e., Vincerx Pharma and Harmony Biosciences go up and down completely randomly.
Pair Corralation between Vincerx Pharma and Harmony Biosciences
Given the investment horizon of 90 days Vincerx Pharma is expected to under-perform the Harmony Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Vincerx Pharma is 1.42 times less risky than Harmony Biosciences. The stock trades about -0.38 of its potential returns per unit of risk. The Harmony Biosciences Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,575 in Harmony Biosciences Holdings on August 27, 2024 and sell it today you would lose (104.00) from holding Harmony Biosciences Holdings or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vincerx Pharma vs. Harmony Biosciences Holdings
Performance |
| Timeline |
| Vincerx Pharma |
| Harmony Biosciences |
Vincerx Pharma and Harmony Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vincerx Pharma and Harmony Biosciences
The main advantage of trading using opposite Vincerx Pharma and Harmony Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vincerx Pharma 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.| Vincerx Pharma vs. Eliem Therapeutics | Vincerx Pharma vs. HCW Biologics | Vincerx Pharma vs. Scpharmaceuticals | Vincerx Pharma vs. Milestone Pharmaceuticals |
| Harmony Biosciences vs. Keros Therapeutics | Harmony Biosciences vs. Janux Therapeutics | Harmony Biosciences vs. Fennec Pharmaceuticals | Harmony Biosciences vs. Edgewise Therapeutics |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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