Correlation Between Revolution Medicines and Uniqure NV

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

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

Diversification Opportunities for Revolution Medicines and Uniqure NV

-0.31

Correlation Coefficient

Revolution Medicines  Uniqure NV

Very good diversification

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

Pair Corralation between Revolution Medicines and Uniqure NV

Given the investment horizon of 90 days Revolution Medicines is expected to generate 28.89 times less return on investment than Uniqure NV. But when comparing it to its historical volatility, Revolution Medicines is 5.32 times less risky than Uniqure NV. It trades about 0.03 of its potential returns per unit of risk. Uniqure NV is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  505.00  in Uniqure NV on September 23, 2024 and sell it today you would earn a total of  1,193  from holding Uniqure NV or generate 236.24% return on investment over 90 days.

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

Revolution Medicines  vs.  Uniqure NV

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.

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.

Pair Trading with Revolution Medicines and Uniqure NV

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

The idea behind Revolution Medicines and Uniqure 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.