Correlation Between Petrochemical and Nextage Therapeutics
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Nextage Therapeutics 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 Petrochemical and Nextage Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Nextage Therapeutics, you can compare the effects of market volatilities on Petrochemical and Nextage Therapeutics 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 Petrochemical with a short position of Nextage Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Nextage Therapeutics.
Diversification Opportunities for Petrochemical and Nextage Therapeutics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Petrochemical and Nextage is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics and Petrochemical 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 Petrochemical are associated (or correlated) with Nextage Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextage Therapeutics has no effect on the direction of Petrochemical i.e., Petrochemical and Nextage Therapeutics go up and down completely randomly.
Pair Corralation between Petrochemical and Nextage Therapeutics
Assuming the 90 days trading horizon Petrochemical is expected to generate 26.34 times less return on investment than Nextage Therapeutics. But when comparing it to its historical volatility, Petrochemical is 3.35 times less risky than Nextage Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Nextage Therapeutics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 7,300 in Nextage Therapeutics on December 11, 2024 and sell it today you would earn a total of 2,300 from holding Nextage Therapeutics or generate 31.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Nextage Therapeutics
Performance |
| Timeline |
| Petrochemical |
| Nextage Therapeutics |
Petrochemical and Nextage Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Nextage Therapeutics
The main advantage of trading using opposite Petrochemical and Nextage Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Nextage Therapeutics 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 Nextage Therapeutics will offset losses from the drop in Nextage Therapeutics' long position.| Petrochemical vs. Adgar Investments and | Petrochemical vs. Inrom Construction Industries | Petrochemical vs. Hiron Trade Investments Industrial | Petrochemical vs. Sure Tech Investments LP |
| Nextage Therapeutics vs. Ilex Medical | Nextage Therapeutics vs. Orbit Technologies | Nextage Therapeutics vs. Mobile Max M | Nextage Therapeutics vs. B Communications |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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