Correlation Between Kane Biotech and Pharming Group
Can any of the company-specific risk be diversified away by investing in both Kane Biotech 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 Kane Biotech and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kane Biotech and Pharming Group NV, you can compare the effects of market volatilities on Kane Biotech 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 Kane Biotech with a short position of Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kane Biotech and Pharming Group.
Diversification Opportunities for Kane Biotech and Pharming Group
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kane and Pharming is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Kane Biotech 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 Kane Biotech 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 Kane Biotech 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 Kane Biotech i.e., Kane Biotech and Pharming Group go up and down completely randomly.
Pair Corralation between Kane Biotech and Pharming Group
Assuming the 90 days horizon Kane Biotech is expected to under-perform the Pharming Group. In addition to that, Kane Biotech is 1.53 times more volatile than Pharming Group NV. It trades about -0.06 of its total potential returns per unit of risk. Pharming Group NV is currently generating about 0.12 per unit of volatility. If you would invest 76.00 in Pharming Group NV on December 5, 2024 and sell it today you would earn a total of 14.00 from holding Pharming Group NV or generate 18.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.77% |
Values | Daily Returns |
Kane Biotech vs. Pharming Group NV
Performance |
Timeline |
Kane Biotech |
Pharming Group NV |
Kane Biotech and Pharming Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kane Biotech and Pharming Group
The main advantage of trading using opposite Kane Biotech and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kane Biotech 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.Kane Biotech vs. Pharming Group NV | Kane Biotech vs. Health Sciences Gr | Kane Biotech vs. MedMira | Kane Biotech vs. Oxford Cannabinoid Technologies |
Pharming Group vs. Garibaldi Resources Corp | Pharming Group vs. IGG Inc | Pharming Group vs. Sino Biopharmaceutical Limited |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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