Correlation Between NewAmsterdam Pharma and EUDA Health

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

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

Diversification Opportunities for NewAmsterdam Pharma and EUDA Health

-0.11

Correlation Coefficient

NewAmsterdam Pharma  EUDA Health

Good diversification

The 3 months correlation between NewAmsterdam and EUDA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NewAmsterdam Pharma and EUDA Health Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EUDA Health Holdings 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 EUDA Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EUDA Health Holdings has no effect on the direction of NewAmsterdam Pharma i.e., NewAmsterdam Pharma and EUDA Health go up and down completely randomly.

Pair Corralation between NewAmsterdam Pharma and EUDA Health

Assuming the 90 days horizon NewAmsterdam Pharma is expected to generate 23.27 times less return on investment than EUDA Health. But when comparing it to its historical volatility, NewAmsterdam Pharma is 22.0 times less risky than EUDA Health. It trades about 0.12 of its potential returns per unit of risk. EUDA Health Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  11.00  in EUDA Health Holdings on August 30, 2024 and sell it today you would lose (2.00) from holding EUDA Health Holdings or give up 18.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.13%
Values	Daily Returns

NewAmsterdam Pharma  vs.  EUDA Health Holdings

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 fairly weak basic indicators, NewAmsterdam Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

EUDA Health Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EUDA Health Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EUDA Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NewAmsterdam Pharma and EUDA Health

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

The idea behind NewAmsterdam Pharma and EUDA Health Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.