Correlation Between NewAmsterdam Pharma and Tharimmune

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

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

Diversification Opportunities for NewAmsterdam Pharma and Tharimmune

-0.47

Correlation Coefficient

NewAmsterdam Pharma  Tharimmune

Very good diversification

The 3 months correlation between NewAmsterdam and Tharimmune is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NewAmsterdam Pharma and Tharimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tharimmune and NewAmsterdam Pharma 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 NewAmsterdam Pharma are associated (or correlated) with Tharimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tharimmune has no effect on the direction of NewAmsterdam Pharma i.e., NewAmsterdam Pharma and Tharimmune go up and down completely randomly.

Pair Corralation between NewAmsterdam Pharma and Tharimmune

Given the investment horizon of 90 days NewAmsterdam Pharma is expected to generate 0.34 times more return on investment than Tharimmune. However, NewAmsterdam Pharma is 2.95 times less risky than Tharimmune. It trades about 0.12 of its potential returns per unit of risk. Tharimmune is currently generating about 0.01 per unit of risk. If you would invest  1,642  in NewAmsterdam Pharma on August 30, 2024 and sell it today you would earn a total of  438.00  from holding NewAmsterdam Pharma or generate 26.67% return on investment over 90 days.

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

NewAmsterdam Pharma  vs.  Tharimmune

NewAmsterdam Pharma

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NewAmsterdam Pharma are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, NewAmsterdam Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tharimmune

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tharimmune are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Tharimmune may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with NewAmsterdam Pharma and Tharimmune

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

The idea behind NewAmsterdam Pharma and Tharimmune 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.