Correlation Between Hookipa Pharma and DiaMedica Therapeutics

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

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

Diversification Opportunities for Hookipa Pharma and DiaMedica Therapeutics

-0.78

Correlation Coefficient

Hookipa Pharma  DiaMedica Therapeutics

Pay attention - limited upside

The 3 months correlation between Hookipa and DiaMedica is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hookipa Pharma and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics and Hookipa 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 Hookipa Pharma are associated (or correlated) with DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of Hookipa Pharma i.e., Hookipa Pharma and DiaMedica Therapeutics go up and down completely randomly.

Pair Corralation between Hookipa Pharma and DiaMedica Therapeutics

Given the investment horizon of 90 days Hookipa Pharma is expected to generate 3.87 times less return on investment than DiaMedica Therapeutics. But when comparing it to its historical volatility, Hookipa Pharma is 1.69 times less risky than DiaMedica Therapeutics. It trades about 0.01 of its potential returns per unit of risk. DiaMedica Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  531.00  in DiaMedica Therapeutics on October 15, 2024 and sell it today you would lose (4.00) from holding DiaMedica Therapeutics or give up 0.75% of portfolio value over 90 days.

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

Hookipa Pharma  vs.  DiaMedica Therapeutics

Hookipa Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hookipa Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

DiaMedica Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DiaMedica Therapeutics are ranked lower than 5 (%) 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.

Pair Trading with Hookipa Pharma and DiaMedica Therapeutics

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

The idea behind Hookipa Pharma and DiaMedica Therapeutics 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.