Correlation Between ProQR Therapeutics and Wave Life

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

Diversification Opportunities for ProQR Therapeutics and Wave Life

0.89

Correlation Coefficient

ProQR Therapeutics  Wave Life

Very poor diversification

The 3 months correlation between ProQR and Wave is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProQR Therapeutics BV and Wave Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Life Sciences 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 Wave Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Life Sciences has no effect on the direction of ProQR Therapeutics i.e., ProQR Therapeutics and Wave Life go up and down completely randomly.

Pair Corralation between ProQR Therapeutics and Wave Life

Given the investment horizon of 90 days ProQR Therapeutics BV is expected to under-perform the Wave Life. In addition to that, ProQR Therapeutics is 1.42 times more volatile than Wave Life Sciences. It trades about -0.11 of its total potential returns per unit of risk. Wave Life Sciences is currently generating about -0.11 per unit of volatility. If you would invest  1,426  in Wave Life Sciences on November 20, 2024 and sell it today you would lose (345.00) from holding Wave Life Sciences or give up 24.19% of portfolio value over 90 days.

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

ProQR Therapeutics BV  vs.  Wave Life Sciences

ProQR Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProQR Therapeutics BV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Wave Life Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wave Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ProQR Therapeutics and Wave Life

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

The idea behind ProQR Therapeutics BV and Wave Life Sciences 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.