Correlation Between Arcus Biosciences and Pharming Group

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

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

Diversification Opportunities for Arcus Biosciences and Pharming Group

0.08

Correlation Coefficient

Arcus Biosciences  Pharming Group

Significant diversification

The 3 months correlation between Arcus and Pharming is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV and Arcus Biosciences 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 Arcus Biosciences are associated (or correlated) with Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of Arcus Biosciences i.e., Arcus Biosciences and Pharming Group go up and down completely randomly.

Pair Corralation between Arcus Biosciences and Pharming Group

Given the investment horizon of 90 days Arcus Biosciences is expected to generate 1.11 times less return on investment than Pharming Group. But when comparing it to its historical volatility, Arcus Biosciences is 1.08 times less risky than Pharming Group. It trades about 0.07 of its potential returns per unit of risk. Pharming Group NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  875.00  in Pharming Group NV on May 1, 2025 and sell it today you would earn a total of  111.00  from holding Pharming Group NV or generate 12.69% return on investment over 90 days.

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

Arcus Biosciences  vs.  Pharming Group NV

Arcus Biosciences

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arcus Biosciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Arcus Biosciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pharming Group NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pharming Group NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Pharming Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arcus Biosciences and Pharming Group

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

The idea behind Arcus Biosciences and Pharming Group NV 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.