Correlation Between HAVN Life and Pharming Group

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

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

Diversification Opportunities for HAVN Life and Pharming Group

-0.3

Correlation Coefficient

HAVN Life  Pharming Group

Very good diversification

The 3 months correlation between HAVN and Pharming is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HAVN Life Sciences and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV and HAVN Life 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 HAVN Life Sciences are associated (or correlated) with Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of HAVN Life i.e., HAVN Life and Pharming Group go up and down completely randomly.

Pair Corralation between HAVN Life and Pharming Group

Assuming the 90 days horizon HAVN Life Sciences is expected to generate 55.9 times more return on investment than Pharming Group. However, HAVN Life is 55.9 times more volatile than Pharming Group NV. It trades about 0.17 of its potential returns per unit of risk. Pharming Group NV is currently generating about 0.33 per unit of risk. If you would invest  0.52  in HAVN Life Sciences on October 12, 2024 and sell it today you would lose (0.42) from holding HAVN Life Sciences or give up 80.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

HAVN Life Sciences  vs.  Pharming Group NV

HAVN Life Sciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HAVN Life Sciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, HAVN Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pharming Group NV

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pharming Group NV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pharming Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HAVN Life and Pharming Group

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

The idea behind HAVN Life Sciences and Pharming Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.