Correlation Between RSL Electronics and Nextage Therapeutics
Can any of the company-specific risk be diversified away by investing in both RSL Electronics 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 RSL Electronics and Nextage Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RSL Electronics and Nextage Therapeutics, you can compare the effects of market volatilities on RSL Electronics 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 RSL Electronics with a short position of Nextage Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of RSL Electronics and Nextage Therapeutics.
Diversification Opportunities for RSL Electronics and Nextage Therapeutics
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RSL and Nextage is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding RSL Electronics and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics and RSL Electronics 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 RSL Electronics 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 RSL Electronics i.e., RSL Electronics and Nextage Therapeutics go up and down completely randomly.
Pair Corralation between RSL Electronics and Nextage Therapeutics
Assuming the 90 days trading horizon RSL Electronics is expected to generate 0.55 times more return on investment than Nextage Therapeutics. However, RSL Electronics is 1.83 times less risky than Nextage Therapeutics. It trades about 0.29 of its potential returns per unit of risk. Nextage Therapeutics is currently generating about 0.04 per unit of risk. If you would invest 70,000 in RSL Electronics on September 13, 2024 and sell it today you would earn a total of 11,250 from holding RSL Electronics or generate 16.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RSL Electronics vs. Nextage Therapeutics
Performance |
| Timeline |
| RSL Electronics |
| Nextage Therapeutics |
RSL Electronics and Nextage Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RSL Electronics and Nextage Therapeutics
The main advantage of trading using opposite RSL Electronics and Nextage Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RSL Electronics 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.| RSL Electronics vs. Aran Research and | RSL Electronics vs. Al Bad Massuot Yitzhak | RSL Electronics vs. Analyst IMS Investment | RSL Electronics vs. Golan Plastic |
| Nextage Therapeutics vs. Feat Fund Investments | Nextage Therapeutics vs. Hiron Trade Investments Industrial | Nextage Therapeutics vs. Arad Investment Industrial | Nextage Therapeutics vs. Opko Health |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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