Correlation Between Pharming Group and Braxia Scientific

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

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

Diversification Opportunities for Pharming Group and Braxia Scientific

0.33

Correlation Coefficient

Pharming Group  Braxia Scientific

Weak diversification

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

Pair Corralation between Pharming Group and Braxia Scientific

Assuming the 90 days horizon Pharming Group is expected to generate 142.06 times less return on investment than Braxia Scientific. But when comparing it to its historical volatility, Pharming Group NV is 11.19 times less risky than Braxia Scientific. It trades about 0.01 of its potential returns per unit of risk. Braxia Scientific Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.20  in Braxia Scientific Corp on September 16, 2024 and sell it today you would earn a total of  0.10  from holding Braxia Scientific Corp or generate 50.0% return on investment over 90 days.

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

Pharming Group NV  vs.  Braxia Scientific Corp

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.

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.

Pair Trading with Pharming Group and Braxia Scientific

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

The idea behind Pharming Group NV and Braxia Scientific Corp 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 Commodity Directory module to find actively traded commodities issued by global exchanges.