Correlation Between Addex Therapeutics and NextCure

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

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

Diversification Opportunities for Addex Therapeutics and NextCure

0.16

Correlation Coefficient

Addex Therapeutics  NextCure

Average diversification

The 3 months correlation between Addex and NextCure is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Addex Therapeutics and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Addex 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 Addex Therapeutics 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 Addex Therapeutics i.e., Addex Therapeutics and NextCure go up and down completely randomly.

Pair Corralation between Addex Therapeutics and NextCure

Given the investment horizon of 90 days Addex Therapeutics is expected to generate 1.36 times more return on investment than NextCure. However, Addex Therapeutics is 1.36 times more volatile than NextCure. It trades about 0.02 of its potential returns per unit of risk. NextCure is currently generating about -0.15 per unit of risk. If you would invest  824.00  in Addex Therapeutics on December 29, 2024 and sell it today you would lose (19.00) from holding Addex Therapeutics or give up 2.31% of portfolio value over 90 days.

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

Addex Therapeutics  vs.  NextCure

Addex Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addex Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Addex Therapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Addex Therapeutics and NextCure

The main advantage of trading using opposite Addex Therapeutics and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addex 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 Addex Therapeutics 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.