Correlation Between Pharming Group and PostNL NV

Can any of the company-specific risk be diversified away by investing in both Pharming Group and PostNL 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 PostNL 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 PostNL NV, you can compare the effects of market volatilities on Pharming Group and PostNL 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 PostNL NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pharming Group and PostNL NV.

Diversification Opportunities for Pharming Group and PostNL NV

0.25

Correlation Coefficient

Pharming Group  PostNL NV

Modest diversification

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

Pair Corralation between Pharming Group and PostNL NV

Assuming the 90 days trading horizon Pharming Group NV is expected to generate 1.91 times more return on investment than PostNL NV. However, Pharming Group is 1.91 times more volatile than PostNL NV. It trades about 0.1 of its potential returns per unit of risk. PostNL NV is currently generating about -0.08 per unit of risk. If you would invest  78.00  in Pharming Group NV on October 12, 2024 and sell it today you would earn a total of  15.00  from holding Pharming Group NV or generate 19.23% return on investment over 90 days.

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

Pharming Group NV  vs.  PostNL NV

Pharming Group NV

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pharming Group NV are ranked lower than 8 (%) 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.

PostNL NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PostNL NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Pharming Group and PostNL NV

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

The idea behind Pharming Group NV and PostNL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.