Correlation Between ProQR Therapeutics and United Therapeutics

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

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

Diversification Opportunities for ProQR Therapeutics and United Therapeutics

0.68

Correlation Coefficient

ProQR Therapeutics  United Therapeutics

Poor diversification

The 3 months correlation between ProQR and United is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding ProQR Therapeutics BV and United Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Therapeutics and ProQR Therapeutics 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 ProQR Therapeutics BV are associated (or correlated) with United Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Therapeutics has no effect on the direction of ProQR Therapeutics i.e., ProQR Therapeutics and United Therapeutics go up and down completely randomly.

Pair Corralation between ProQR Therapeutics and United Therapeutics

Given the investment horizon of 90 days ProQR Therapeutics BV is expected to generate 4.89 times more return on investment than United Therapeutics. However, ProQR Therapeutics is 4.89 times more volatile than United Therapeutics. It trades about 0.06 of its potential returns per unit of risk. United Therapeutics is currently generating about 0.11 per unit of risk. If you would invest  173.00  in ProQR Therapeutics BV on August 27, 2024 and sell it today you would earn a total of  189.00  from holding ProQR Therapeutics BV or generate 109.25% return on investment over 90 days.

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

ProQR Therapeutics BV  vs.  United Therapeutics

ProQR Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProQR Therapeutics BV are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ProQR Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

United Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, United Therapeutics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ProQR Therapeutics and United Therapeutics

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

The idea behind ProQR Therapeutics BV and United Therapeutics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.