Correlation Between Bio Path and NextCure
Can any of the company-specific risk be diversified away by investing in both Bio Path and NextCure 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 Bio Path and NextCure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Path Holdings and NextCure, you can compare the effects of market volatilities on Bio Path and NextCure 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 Bio Path with a short position of NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Path and NextCure.
Diversification Opportunities for Bio Path and NextCure
Very weak diversification
The 3 months correlation between Bio and NextCure is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Bio Path 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 Bio Path Holdings are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Bio Path i.e., Bio Path and NextCure go up and down completely randomly.
Pair Corralation between Bio Path and NextCure
Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the NextCure. In addition to that, Bio Path is 2.1 times more volatile than NextCure. It trades about -0.07 of its total potential returns per unit of risk. NextCure is currently generating about 0.0 per unit of volatility. If you would invest 166.00 in NextCure on September 1, 2024 and sell it today you would lose (49.00) from holding NextCure or give up 29.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Path Holdings vs. NextCure
Performance |
| Timeline |
| Bio Path Holdings |
| NextCure |
Bio Path and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Path and NextCure
The main advantage of trading using opposite Bio Path and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Path position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure's long position.| Bio Path vs. Capricor Therapeutics | Bio Path vs. NextCure | Bio Path vs. Pulmatrix | Bio Path vs. Crinetics Pharmaceuticals |
| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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