Correlation Between Hanesbrands and Pharming Group

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

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

Diversification Opportunities for Hanesbrands and Pharming Group

0.55

Correlation Coefficient

Hanesbrands  Pharming Group

Very weak diversification

The 3 months correlation between Hanesbrands and Pharming is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hanesbrands 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 Hanesbrands 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 Hanesbrands 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 Hanesbrands i.e., Hanesbrands and Pharming Group go up and down completely randomly.

Pair Corralation between Hanesbrands and Pharming Group

Considering the 90-day investment horizon Hanesbrands is expected to under-perform the Pharming Group. In addition to that, Hanesbrands is 1.14 times more volatile than Pharming Group NV. It trades about -0.16 of its total potential returns per unit of risk. Pharming Group NV is currently generating about -0.04 per unit of volatility. If you would invest  98.00  in Pharming Group NV on December 28, 2024 and sell it today you would lose (8.00) from holding Pharming Group NV or give up 8.16% of portfolio value over 90 days.

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

Hanesbrands  vs.  Pharming Group NV

Hanesbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hanesbrands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pharming Group NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pharming Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Hanesbrands and Pharming Group

The main advantage of trading using opposite Hanesbrands and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanesbrands 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 Hanesbrands 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.