Correlation Between Braxia Scientific and Pharming Group

Can any of the company-specific risk be diversified away by investing in both Braxia Scientific and Pharming Group 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 Braxia Scientific and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Braxia Scientific and Pharming Group

0.33

Correlation Coefficient

Braxia Scientific  Pharming Group

Weak diversification

The 3 months correlation between Braxia and Pharming is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Braxia Scientific Corp and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV and Braxia Scientific 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 Braxia Scientific Corp are associated (or correlated) with Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of Braxia Scientific i.e., Braxia Scientific and Pharming Group go up and down completely randomly.

Pair Corralation between Braxia Scientific and Pharming Group

Assuming the 90 days horizon Braxia Scientific Corp is expected to generate 9.87 times more return on investment than Pharming Group. However, Braxia Scientific is 9.87 times more volatile than Pharming Group NV. It trades about 0.08 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.18 per unit of risk. If you would invest  0.30  in Braxia Scientific Corp on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Braxia Scientific Corp or generate 0.0% return on investment over 90 days.

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

Braxia Scientific Corp  vs.  Pharming Group NV

Braxia Scientific Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Braxia Scientific Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Braxia Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Pharming Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pharming Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pharming Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Braxia Scientific and Pharming Group

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

The idea behind Braxia Scientific Corp and Pharming Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.