Correlation Between NewAmsterdam Pharma and Fusion Pharmaceuticals

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

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

Diversification Opportunities for NewAmsterdam Pharma and Fusion Pharmaceuticals

0.25

Correlation Coefficient

NewAmsterdam Pharma  Fusion Pharmaceuticals

Modest diversification

The 3 months correlation between NewAmsterdam and Fusion is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding NewAmsterdam Pharma and Fusion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fusion Pharmaceuticals and NewAmsterdam 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 NewAmsterdam Pharma are associated (or correlated) with Fusion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fusion Pharmaceuticals has no effect on the direction of NewAmsterdam Pharma i.e., NewAmsterdam Pharma and Fusion Pharmaceuticals go up and down completely randomly.

Pair Corralation between NewAmsterdam Pharma and Fusion Pharmaceuticals

If you would invest  2,459  in NewAmsterdam Pharma on September 12, 2024 and sell it today you would earn a total of  98.00  from holding NewAmsterdam Pharma or generate 3.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

NewAmsterdam Pharma  vs.  Fusion Pharmaceuticals

NewAmsterdam Pharma

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NewAmsterdam Pharma are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, NewAmsterdam Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fusion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fusion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fusion Pharmaceuticals is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NewAmsterdam Pharma and Fusion Pharmaceuticals

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

The idea behind NewAmsterdam Pharma and Fusion Pharmaceuticals 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.