Correlation Between Achilles Therapeutics and NextCure

Can any of the company-specific risk be diversified away by investing in both Achilles Therapeutics and NextCure 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 Achilles Therapeutics and NextCure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Achilles Therapeutics PLC and NextCure, you can compare the effects of market volatilities on Achilles Therapeutics and NextCure 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 Achilles Therapeutics with a short position of NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Achilles Therapeutics and NextCure.

Diversification Opportunities for Achilles Therapeutics and NextCure

-0.68

Correlation Coefficient

Achilles Therapeutics  NextCure

Excellent diversification

The 3 months correlation between Achilles and NextCure is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Achilles Therapeutics PLC and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Achilles Therapeutics 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 Achilles Therapeutics PLC are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Achilles Therapeutics i.e., Achilles Therapeutics and NextCure go up and down completely randomly.

Pair Corralation between Achilles Therapeutics and NextCure

Given the investment horizon of 90 days Achilles Therapeutics PLC is expected to generate 0.9 times more return on investment than NextCure. However, Achilles Therapeutics PLC is 1.11 times less risky than NextCure. It trades about 0.13 of its potential returns per unit of risk. NextCure is currently generating about -0.14 per unit of risk. If you would invest  107.00  in Achilles Therapeutics PLC on December 1, 2024 and sell it today you would earn a total of  32.00  from holding Achilles Therapeutics PLC or generate 29.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Achilles Therapeutics PLC  vs.  NextCure

Achilles Therapeutics PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Achilles Therapeutics PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical indicators, Achilles Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

NextCure

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextCure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Achilles Therapeutics and NextCure

The main advantage of trading using opposite Achilles Therapeutics and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Achilles Therapeutics position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure's long position.

The idea behind Achilles Therapeutics PLC and NextCure 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.