Correlation Between Hydract AS and Orphazyme

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

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

Diversification Opportunities for Hydract AS and Orphazyme

-0.33

Correlation Coefficient

Hydract AS  Orphazyme

Very good diversification

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

Pair Corralation between Hydract AS and Orphazyme

Assuming the 90 days trading horizon Hydract AS is expected to generate 3.91 times more return on investment than Orphazyme. However, Hydract AS is 3.91 times more volatile than Orphazyme AS. It trades about 0.03 of its potential returns per unit of risk. Orphazyme AS is currently generating about 0.07 per unit of risk. If you would invest  126.00  in Hydract AS on September 12, 2024 and sell it today you would lose (86.00) from holding Hydract AS or give up 68.25% of portfolio value over 90 days.

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

Hydract AS  vs.  Orphazyme AS

Hydract AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hydract AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Hydract AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Orphazyme AS

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orphazyme AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Orphazyme exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hydract AS and Orphazyme

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

The idea behind Hydract AS and Orphazyme AS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.