Correlation Between DiaMedica Therapeutics and CureVac NV

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

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

Diversification Opportunities for DiaMedica Therapeutics and CureVac NV

0.16

Correlation Coefficient

DiaMedica Therapeutics  CureVac NV

Average diversification

The 3 months correlation between DiaMedica and CureVac is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding DiaMedica Therapeutics and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV and DiaMedica Therapeutics 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 DiaMedica Therapeutics are associated (or correlated) with CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of DiaMedica Therapeutics i.e., DiaMedica Therapeutics and CureVac NV go up and down completely randomly.

Pair Corralation between DiaMedica Therapeutics and CureVac NV

Given the investment horizon of 90 days DiaMedica Therapeutics is expected to generate 1.05 times more return on investment than CureVac NV. However, DiaMedica Therapeutics is 1.05 times more volatile than CureVac NV. It trades about 0.04 of its potential returns per unit of risk. CureVac NV is currently generating about -0.06 per unit of risk. If you would invest  370.00  in DiaMedica Therapeutics on September 12, 2024 and sell it today you would earn a total of  146.00  from holding DiaMedica Therapeutics or generate 39.46% return on investment over 90 days.

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

DiaMedica Therapeutics  vs.  CureVac NV

DiaMedica Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DiaMedica Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, DiaMedica Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

CureVac NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CureVac NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CureVac NV may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DiaMedica Therapeutics and CureVac NV

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

The idea behind DiaMedica Therapeutics and CureVac NV 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.