Correlation Between TME Pharma and Munic SA

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

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

Diversification Opportunities for TME Pharma and Munic SA

0.56

Correlation Coefficient

TME Pharma  Munic SA

Very weak diversification

The 3 months correlation between TME and Munic is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TME Pharma NV and Munic SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munic SA and TME 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 TME Pharma NV are associated (or correlated) with Munic SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munic SA has no effect on the direction of TME Pharma i.e., TME Pharma and Munic SA go up and down completely randomly.

Pair Corralation between TME Pharma and Munic SA

Assuming the 90 days trading horizon TME Pharma is expected to generate 1.03 times less return on investment than Munic SA. But when comparing it to its historical volatility, TME Pharma NV is 1.16 times less risky than Munic SA. It trades about 0.18 of its potential returns per unit of risk. Munic SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  49.00  in Munic SA on April 24, 2025 and sell it today you would earn a total of  33.00  from holding Munic SA or generate 67.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

TME Pharma NV  vs.  Munic SA

TME Pharma NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TME Pharma NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, TME Pharma reported solid returns over the last few months and may actually be approaching a breakup point.

Munic SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Munic SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Munic SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TME Pharma and Munic SA

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

The idea behind TME Pharma NV and Munic SA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.