Correlation Between Affimed NV and DiaMedica Therapeutics

Can any of the company-specific risk be diversified away by investing in both Affimed NV and DiaMedica 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 Affimed NV and DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Affimed NV and DiaMedica Therapeutics, you can compare the effects of market volatilities on Affimed NV and DiaMedica 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 Affimed NV with a short position of DiaMedica Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affimed NV and DiaMedica Therapeutics.

Diversification Opportunities for Affimed NV and DiaMedica Therapeutics

0.21

Correlation Coefficient

Affimed NV  DiaMedica Therapeutics

Modest diversification

The 3 months correlation between Affimed and DiaMedica is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Affimed NV and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics and Affimed NV 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 Affimed NV are associated (or correlated) with DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of Affimed NV i.e., Affimed NV and DiaMedica Therapeutics go up and down completely randomly.

Pair Corralation between Affimed NV and DiaMedica Therapeutics

Given the investment horizon of 90 days Affimed NV is expected to under-perform the DiaMedica Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Affimed NV is 1.11 times less risky than DiaMedica Therapeutics. The stock trades about -0.19 of its potential returns per unit of risk. The DiaMedica Therapeutics is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  534.00  in DiaMedica Therapeutics on December 30, 2024 and sell it today you would lose (152.00) from holding DiaMedica Therapeutics or give up 28.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Affimed NV  vs.  DiaMedica Therapeutics

Affimed NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affimed NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DiaMedica Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days DiaMedica Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Affimed NV and DiaMedica Therapeutics

The main advantage of trading using opposite Affimed NV and DiaMedica Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affimed NV position performs unexpectedly, DiaMedica 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 DiaMedica Therapeutics will offset losses from the drop in DiaMedica Therapeutics' long position.

The idea behind Affimed NV and DiaMedica Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.