Correlation Between Amicus Therapeutics and BridgeBio Pharma

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

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

Diversification Opportunities for Amicus Therapeutics and BridgeBio Pharma

-0.54

Correlation Coefficient

Amicus Therapeutics  BridgeBio Pharma

Excellent diversification

The 3 months correlation between Amicus and BridgeBio is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Amicus Therapeutics and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma and Amicus 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 Amicus Therapeutics are associated (or correlated) with BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Amicus Therapeutics i.e., Amicus Therapeutics and BridgeBio Pharma go up and down completely randomly.

Pair Corralation between Amicus Therapeutics and BridgeBio Pharma

Given the investment horizon of 90 days Amicus Therapeutics is expected to under-perform the BridgeBio Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Amicus Therapeutics is 2.86 times less risky than BridgeBio Pharma. The stock trades about -0.15 of its potential returns per unit of risk. The BridgeBio Pharma is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,777  in BridgeBio Pharma on October 24, 2024 and sell it today you would earn a total of  831.00  from holding BridgeBio Pharma or generate 29.92% return on investment over 90 days.

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

Amicus Therapeutics  vs.  BridgeBio Pharma

Amicus Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amicus Therapeutics 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 essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

BridgeBio Pharma

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BridgeBio Pharma are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, BridgeBio Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amicus Therapeutics and BridgeBio Pharma

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

The idea behind Amicus Therapeutics and BridgeBio Pharma 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.