Correlation Between ProQR Therapeutics and Alnylam Pharmaceuticals

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

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

Diversification Opportunities for ProQR Therapeutics and Alnylam Pharmaceuticals

0.04

Correlation Coefficient

ProQR Therapeutics  Alnylam Pharmaceuticals

Significant diversification

The 3 months correlation between ProQR and Alnylam is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ProQR Therapeutics BV and Alnylam Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alnylam Pharmaceuticals and ProQR Therapeutics 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 ProQR Therapeutics BV are associated (or correlated) with Alnylam Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alnylam Pharmaceuticals has no effect on the direction of ProQR Therapeutics i.e., ProQR Therapeutics and Alnylam Pharmaceuticals go up and down completely randomly.

Pair Corralation between ProQR Therapeutics and Alnylam Pharmaceuticals

Given the investment horizon of 90 days ProQR Therapeutics BV is expected to generate 7.31 times more return on investment than Alnylam Pharmaceuticals. However, ProQR Therapeutics is 7.31 times more volatile than Alnylam Pharmaceuticals. It trades about 0.12 of its potential returns per unit of risk. Alnylam Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest  192.00  in ProQR Therapeutics BV on September 2, 2024 and sell it today you would earn a total of  192.00  from holding ProQR Therapeutics BV or generate 100.0% return on investment over 90 days.

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

ProQR Therapeutics BV  vs.  Alnylam Pharmaceuticals

ProQR Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProQR Therapeutics BV are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ProQR Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Alnylam Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ProQR Therapeutics and Alnylam Pharmaceuticals

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

The idea behind ProQR Therapeutics BV and Alnylam 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.