Correlation Between Genfit and Pharming Group

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

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

Diversification Opportunities for Genfit and Pharming Group

0.66

Correlation Coefficient

Genfit  Pharming Group

Poor diversification

The 3 months correlation between Genfit and Pharming is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Genfit 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 Genfit 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 Genfit 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 Genfit i.e., Genfit and Pharming Group go up and down completely randomly.

Pair Corralation between Genfit and Pharming Group

Given the investment horizon of 90 days Genfit is expected to under-perform the Pharming Group. In addition to that, Genfit is 1.31 times more volatile than Pharming Group NV. It trades about 0.0 of its total potential returns per unit of risk. Pharming Group NV is currently generating about 0.12 per unit of volatility. If you would invest  750.00  in Pharming Group NV on September 13, 2024 and sell it today you would earn a total of  182.00  from holding Pharming Group NV or generate 24.27% return on investment over 90 days.

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

Genfit  vs.  Pharming Group NV

Genfit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genfit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Genfit is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pharming Group NV

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Genfit and Pharming Group

The main advantage of trading using opposite Genfit and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genfit 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 Genfit 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.