Correlation Between PepGen and NewAmsterdam Pharma

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

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

Diversification Opportunities for PepGen and NewAmsterdam Pharma

0.79

Correlation Coefficient

PepGen  NewAmsterdam Pharma

Poor diversification

The 3 months correlation between PepGen and NewAmsterdam is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PepGen and NewAmsterdam Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewAmsterdam Pharma and PepGen 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 PepGen are associated (or correlated) with NewAmsterdam Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewAmsterdam Pharma has no effect on the direction of PepGen i.e., PepGen and NewAmsterdam Pharma go up and down completely randomly.

Pair Corralation between PepGen and NewAmsterdam Pharma

Given the investment horizon of 90 days PepGen is expected to under-perform the NewAmsterdam Pharma. In addition to that, PepGen is 2.57 times more volatile than NewAmsterdam Pharma. It trades about -0.04 of its total potential returns per unit of risk. NewAmsterdam Pharma is currently generating about -0.05 per unit of volatility. If you would invest  1,389  in NewAmsterdam Pharma on December 28, 2024 and sell it today you would lose (343.00) from holding NewAmsterdam Pharma or give up 24.69% of portfolio value over 90 days.

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

PepGen  vs.  NewAmsterdam Pharma

PepGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepGen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NewAmsterdam Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days NewAmsterdam Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with PepGen and NewAmsterdam Pharma

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

The idea behind PepGen and NewAmsterdam Pharma 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.