Correlation Between Arm Holdings and Nyxoah
Can any of the company-specific risk be diversified away by investing in both Arm Holdings and Nyxoah 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 Arm Holdings and Nyxoah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arm Holdings plc and Nyxoah, you can compare the effects of market volatilities on Arm Holdings and Nyxoah 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 Arm Holdings with a short position of Nyxoah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and Nyxoah.
Diversification Opportunities for Arm Holdings and Nyxoah
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arm and Nyxoah is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Nyxoah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyxoah and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with Nyxoah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyxoah has no effect on the direction of Arm Holdings i.e., Arm Holdings and Nyxoah go up and down completely randomly.
Pair Corralation between Arm Holdings and Nyxoah
Considering the 90-day investment horizon Arm Holdings plc is expected to generate 1.41 times more return on investment than Nyxoah. However, Arm Holdings is 1.41 times more volatile than Nyxoah. It trades about -0.09 of its potential returns per unit of risk. Nyxoah is currently generating about -0.33 per unit of risk. If you would invest 15,002 in Arm Holdings plc on August 28, 2024 and sell it today you would lose (1,034) from holding Arm Holdings plc or give up 6.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arm Holdings plc vs. Nyxoah
Performance |
| Timeline |
| Arm Holdings plc |
| Nyxoah |
Arm Holdings and Nyxoah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arm Holdings and Nyxoah
The main advantage of trading using opposite Arm Holdings and Nyxoah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings position performs unexpectedly, Nyxoah 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 Nyxoah will offset losses from the drop in Nyxoah's long position.The idea behind Arm Holdings plc and Nyxoah 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.| Nyxoah vs. Milestone Scientific | Nyxoah vs. Pro Dex | Nyxoah vs. InfuSystems Holdings | Nyxoah vs. Repro Med Systems |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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