Correlation Between Forward Pharma and Qualys

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

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

Diversification Opportunities for Forward Pharma and Qualys

0.0

Correlation Coefficient

Forward Pharma  Qualys

Pay attention - limited upside

The 3 months correlation between Forward and Qualys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Forward Pharma AS and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc and Forward 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 Forward Pharma AS are associated (or correlated) with Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Forward Pharma i.e., Forward Pharma and Qualys go up and down completely randomly.

Pair Corralation between Forward Pharma and Qualys

If you would invest (100.00) in Forward Pharma AS on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Forward Pharma AS or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Forward Pharma AS  vs.  Qualys Inc

Forward Pharma AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forward Pharma AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Forward Pharma is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Qualys Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qualys Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Qualys is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Forward Pharma and Qualys

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

The idea behind Forward Pharma AS and Qualys Inc 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.