Correlation Between Genmab AS and Simulations Plus

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

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

Diversification Opportunities for Genmab AS and Simulations Plus

0.38

Correlation Coefficient

Genmab AS  Simulations Plus

Weak diversification

The 3 months correlation between Genmab and Simulations is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Simulations Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simulations Plus and Genmab AS 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 Genmab AS are associated (or correlated) with Simulations Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simulations Plus has no effect on the direction of Genmab AS i.e., Genmab AS and Simulations Plus go up and down completely randomly.

Pair Corralation between Genmab AS and Simulations Plus

Assuming the 90 days horizon Genmab AS is expected to under-perform the Simulations Plus. But the pink sheet apears to be less risky and, when comparing its historical volatility, Genmab AS is 2.71 times less risky than Simulations Plus. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Simulations Plus is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,135  in Simulations Plus on January 27, 2024 and sell it today you would earn a total of  430.00  from holding Simulations Plus or generate 10.4% return on investment over 90 days.

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

Genmab AS  vs.  Simulations Plus

Genmab AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genmab AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Genmab AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Simulations Plus

Risk-Adjusted Performance

5 of 100

OK

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

Pair Trading with Genmab AS and Simulations Plus

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

The idea behind Genmab AS and Simulations Plus 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.