Correlation Between EUDA Health and NexGel Warrant
Can any of the company-specific risk be diversified away by investing in both EUDA Health and NexGel Warrant 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 EUDA Health and NexGel Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EUDA Health Holdings and NexGel Warrant, you can compare the effects of market volatilities on EUDA Health and NexGel Warrant 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 EUDA Health with a short position of NexGel Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of EUDA Health and NexGel Warrant.
Diversification Opportunities for EUDA Health and NexGel Warrant
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between EUDA and NexGel is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding EUDA Health Holdings and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant and EUDA Health 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 EUDA Health Holdings are associated (or correlated) with NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of EUDA Health i.e., EUDA Health and NexGel Warrant go up and down completely randomly.
Pair Corralation between EUDA Health and NexGel Warrant
Given the investment horizon of 90 days EUDA Health is expected to generate 17.17 times less return on investment than NexGel Warrant. But when comparing it to its historical volatility, EUDA Health Holdings is 13.02 times less risky than NexGel Warrant. It trades about 0.07 of its potential returns per unit of risk. NexGel Warrant is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 18.00 in NexGel Warrant on August 29, 2024 and sell it today you would earn a total of 30.00 from holding NexGel Warrant or generate 166.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.96% |
| Values | Daily Returns |
EUDA Health Holdings vs. NexGel Warrant
Performance |
| Timeline |
| EUDA Health Holdings |
| NexGel Warrant |
EUDA Health and NexGel Warrant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EUDA Health and NexGel Warrant
The main advantage of trading using opposite EUDA Health and NexGel Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EUDA Health position performs unexpectedly, NexGel Warrant 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 NexGel Warrant will offset losses from the drop in NexGel Warrant's long position.The idea behind EUDA Health Holdings and NexGel Warrant 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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