Correlation Between Uniqure NV and Revolution Medicines

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

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

Diversification Opportunities for Uniqure NV and Revolution Medicines

-0.31

Correlation Coefficient

Uniqure NV  Revolution Medicines

Very good diversification

The 3 months correlation between Uniqure and Revolution is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Uniqure NV and Revolution Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Medicines and Uniqure NV 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 Uniqure NV are associated (or correlated) with Revolution Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Medicines has no effect on the direction of Uniqure NV i.e., Uniqure NV and Revolution Medicines go up and down completely randomly.

Pair Corralation between Uniqure NV and Revolution Medicines

Given the investment horizon of 90 days Uniqure NV is expected to generate 7.94 times more return on investment than Revolution Medicines. However, Uniqure NV is 7.94 times more volatile than Revolution Medicines. It trades about 0.29 of its potential returns per unit of risk. Revolution Medicines is currently generating about -0.37 per unit of risk. If you would invest  578.00  in Uniqure NV on September 23, 2024 and sell it today you would earn a total of  1,120  from holding Uniqure NV or generate 193.77% return on investment over 90 days.

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

Uniqure NV  vs.  Revolution Medicines

Uniqure NV

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Uniqure NV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Uniqure NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Revolution Medicines

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Medicines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Revolution Medicines is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Uniqure NV and Revolution Medicines

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

The idea behind Uniqure NV and Revolution Medicines 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.