Correlation Between Affimed NV and Recursion Pharmaceuticals

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

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

Diversification Opportunities for Affimed NV and Recursion Pharmaceuticals

0.57

Correlation Coefficient

Affimed NV  Recursion Pharmaceuticals

Very weak diversification

The 3 months correlation between Affimed and Recursion is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Affimed NV and Recursion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recursion Pharmaceuticals 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 Recursion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recursion Pharmaceuticals has no effect on the direction of Affimed NV i.e., Affimed NV and Recursion Pharmaceuticals go up and down completely randomly.

Pair Corralation between Affimed NV and Recursion Pharmaceuticals

Given the investment horizon of 90 days Affimed NV is expected to under-perform the Recursion Pharmaceuticals. In addition to that, Affimed NV is 1.18 times more volatile than Recursion Pharmaceuticals. It trades about -0.1 of its total potential returns per unit of risk. Recursion Pharmaceuticals is currently generating about -0.03 per unit of volatility. If you would invest  674.00  in Recursion Pharmaceuticals on August 30, 2024 and sell it today you would lose (36.00) from holding Recursion Pharmaceuticals or give up 5.34% of portfolio value over 90 days.

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

Affimed NV  vs.  Recursion Pharmaceuticals

Affimed NV

Risk-Adjusted Performance

0 of 100

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 December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Recursion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Recursion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Affimed NV and Recursion Pharmaceuticals

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

The idea behind Affimed NV and Recursion Pharmaceuticals 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.