Correlation Between Pharming Group and Fugro NV

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

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

Diversification Opportunities for Pharming Group and Fugro NV

-0.09

Correlation Coefficient

Pharming Group  Fugro NV

Good diversification

The 3 months correlation between Pharming and Fugro is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pharming Group NV and Fugro NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fugro NV and Pharming Group 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 Pharming Group NV are associated (or correlated) with Fugro NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fugro NV has no effect on the direction of Pharming Group i.e., Pharming Group and Fugro NV go up and down completely randomly.

Pair Corralation between Pharming Group and Fugro NV

Assuming the 90 days trading horizon Pharming Group NV is expected to under-perform the Fugro NV. In addition to that, Pharming Group is 1.21 times more volatile than Fugro NV. It trades about -0.02 of its total potential returns per unit of risk. Fugro NV is currently generating about 0.01 per unit of volatility. If you would invest  1,555  in Fugro NV on October 27, 2024 and sell it today you would earn a total of  9.00  from holding Fugro NV or generate 0.58% return on investment over 90 days.

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

Pharming Group NV  vs.  Fugro NV

Pharming Group NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pharming Group NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Pharming Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Fugro NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fugro NV 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pharming Group and Fugro NV

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

The idea behind Pharming Group NV and Fugro NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.