Correlation Between Arad Investment and Nextage Therapeutics
Can any of the company-specific risk be diversified away by investing in both Arad Investment and Nextage 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 Arad Investment and Nextage Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arad Investment Industrial and Nextage Therapeutics, you can compare the effects of market volatilities on Arad Investment and Nextage 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 Arad Investment with a short position of Nextage Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arad Investment and Nextage Therapeutics.
Diversification Opportunities for Arad Investment and Nextage Therapeutics
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arad and Nextage is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Arad Investment Industrial and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics and Arad Investment 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 Arad Investment Industrial are associated (or correlated) with Nextage Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextage Therapeutics has no effect on the direction of Arad Investment i.e., Arad Investment and Nextage Therapeutics go up and down completely randomly.
Pair Corralation between Arad Investment and Nextage Therapeutics
Assuming the 90 days trading horizon Arad Investment Industrial is expected to generate 0.68 times more return on investment than Nextage Therapeutics. However, Arad Investment Industrial is 1.47 times less risky than Nextage Therapeutics. It trades about 0.71 of its potential returns per unit of risk. Nextage Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 992,000 in Arad Investment Industrial on September 13, 2024 and sell it today you would earn a total of 581,000 from holding Arad Investment Industrial or generate 58.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arad Investment Industrial vs. Nextage Therapeutics
Performance |
| Timeline |
| Arad Investment Indu |
| Nextage Therapeutics |
Arad Investment and Nextage Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arad Investment and Nextage Therapeutics
The main advantage of trading using opposite Arad Investment and Nextage Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arad Investment position performs unexpectedly, Nextage 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 Nextage Therapeutics will offset losses from the drop in Nextage Therapeutics' long position.| Arad Investment vs. Aran Research and | Arad Investment vs. Al Bad Massuot Yitzhak | Arad Investment vs. Analyst IMS Investment | Arad Investment vs. Golan Plastic |
| Nextage Therapeutics vs. Feat Fund Investments | Nextage Therapeutics vs. Hiron Trade Investments Industrial | Nextage Therapeutics vs. Arad Investment Industrial | Nextage Therapeutics vs. Opko Health |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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