Correlation Between NXT Energy and Rafarma Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both NXT Energy and Rafarma Pharmaceuticals 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 NXT Energy and Rafarma Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXT Energy Solutions and Rafarma Pharmaceuticals, you can compare the effects of market volatilities on NXT Energy and Rafarma Pharmaceuticals 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 NXT Energy with a short position of Rafarma Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT Energy and Rafarma Pharmaceuticals.
Diversification Opportunities for NXT Energy and Rafarma Pharmaceuticals
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NXT and Rafarma is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NXT Energy Solutions and Rafarma Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rafarma Pharmaceuticals and NXT Energy 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 NXT Energy Solutions are associated (or correlated) with Rafarma Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rafarma Pharmaceuticals has no effect on the direction of NXT Energy i.e., NXT Energy and Rafarma Pharmaceuticals go up and down completely randomly.
Pair Corralation between NXT Energy and Rafarma Pharmaceuticals
Assuming the 90 days horizon NXT Energy Solutions is expected to generate 1.34 times more return on investment than Rafarma Pharmaceuticals. However, NXT Energy is 1.34 times more volatile than Rafarma Pharmaceuticals. It trades about 0.14 of its potential returns per unit of risk. Rafarma Pharmaceuticals is currently generating about -0.12 per unit of risk. If you would invest 13.00 in NXT Energy Solutions on August 31, 2024 and sell it today you would earn a total of 3.00 from holding NXT Energy Solutions or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXT Energy Solutions vs. Rafarma Pharmaceuticals
Performance |
| Timeline |
| NXT Energy Solutions |
| Rafarma Pharmaceuticals |
NXT Energy and Rafarma Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXT Energy and Rafarma Pharmaceuticals
The main advantage of trading using opposite NXT Energy and Rafarma Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXT Energy position performs unexpectedly, Rafarma Pharmaceuticals 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 Rafarma Pharmaceuticals will offset losses from the drop in Rafarma Pharmaceuticals' long position.| NXT Energy vs. Petroleo Brasileiro Petrobras | NXT Energy vs. Equinor ASA ADR | NXT Energy vs. Eni SpA ADR | NXT Energy vs. YPF Sociedad Anonima |
| Rafarma Pharmaceuticals vs. Perk International | Rafarma Pharmaceuticals vs. SANUWAVE Health | Rafarma Pharmaceuticals vs. Verde Bio Holdings | Rafarma Pharmaceuticals vs. Bryn Resources |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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