Correlation Between Nyxoah and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Nyxoah and Solvay SA 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 Nyxoah and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nyxoah and Solvay SA, you can compare the effects of market volatilities on Nyxoah and Solvay SA 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 Nyxoah with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nyxoah and Solvay SA.
Diversification Opportunities for Nyxoah and Solvay SA
Very poor diversification
The 3 months correlation between Nyxoah and Solvay is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nyxoah and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Nyxoah 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 Nyxoah are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Nyxoah i.e., Nyxoah and Solvay SA go up and down completely randomly.
Pair Corralation between Nyxoah and Solvay SA
Assuming the 90 days trading horizon Nyxoah is expected to generate 2.62 times more return on investment than Solvay SA. However, Nyxoah is 2.62 times more volatile than Solvay SA. It trades about 0.07 of its potential returns per unit of risk. Solvay SA is currently generating about 0.09 per unit of risk. If you would invest 455.00 in Nyxoah on August 26, 2024 and sell it today you would earn a total of 349.00 from holding Nyxoah or generate 76.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nyxoah vs. Solvay SA
Performance |
| Timeline |
| Nyxoah |
| Solvay SA |
Nyxoah and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nyxoah and Solvay SA
The main advantage of trading using opposite Nyxoah and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nyxoah position performs unexpectedly, Solvay SA 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 Solvay SA will offset losses from the drop in Solvay SA's long position.The idea behind Nyxoah and Solvay SA 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.| Solvay SA vs. Retail Estates | Solvay SA vs. Vastned Retail Belgium | Solvay SA vs. Home Invest Belgium | Solvay SA vs. Onward Medical NV |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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