Correlation Between OKYO Pharma and Pharming Group
Can any of the company-specific risk be diversified away by investing in both OKYO Pharma 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 OKYO Pharma and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OKYO Pharma Ltd and Pharming Group NV, you can compare the effects of market volatilities on OKYO Pharma 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 OKYO Pharma with a short position of Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of OKYO Pharma and Pharming Group.
Diversification Opportunities for OKYO Pharma and Pharming Group
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OKYO and Pharming is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding OKYO Pharma Ltd 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 OKYO 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 OKYO Pharma Ltd 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 OKYO Pharma i.e., OKYO Pharma and Pharming Group go up and down completely randomly.
Pair Corralation between OKYO Pharma and Pharming Group
Given the investment horizon of 90 days OKYO Pharma is expected to generate 1.14 times less return on investment than Pharming Group. In addition to that, OKYO Pharma is 1.74 times more volatile than Pharming Group NV. It trades about 0.04 of its total potential returns per unit of risk. Pharming Group NV is currently generating about 0.08 per unit of volatility. If you would invest 76.00 in Pharming Group NV on September 24, 2024 and sell it today you would earn a total of 8.00 from holding Pharming Group NV or generate 10.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
OKYO Pharma Ltd vs. Pharming Group NV
Performance |
Timeline |
OKYO Pharma |
Pharming Group NV |
OKYO Pharma and Pharming Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with OKYO Pharma and Pharming Group
The main advantage of trading using opposite OKYO Pharma and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OKYO Pharma 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.OKYO Pharma vs. Fate Therapeutics | OKYO Pharma vs. Sana Biotechnology | OKYO Pharma vs. Caribou Biosciences | OKYO Pharma vs. Arcus Biosciences |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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