Correlation Between Armada Hflr and NexGel Warrant

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

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

Diversification Opportunities for Armada Hflr and NexGel Warrant

-0.62

Correlation Coefficient

Armada Hflr  NexGel Warrant

Excellent diversification

The 3 months correlation between Armada and NexGel is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of Armada Hflr i.e., Armada Hflr and NexGel Warrant go up and down completely randomly.

Pair Corralation between Armada Hflr and NexGel Warrant

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the NexGel Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 58.32 times less risky than NexGel Warrant. The stock trades about -0.01 of its potential returns per unit of risk. The NexGel Warrant is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  39.00  in NexGel Warrant on October 3, 2024 and sell it today you would earn a total of  36.00  from holding NexGel Warrant or generate 92.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.05%
Values	Daily Returns

Armada Hflr Pr  vs.  NexGel Warrant

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

NexGel Warrant

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, NexGel Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and NexGel Warrant

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

The idea behind Armada Hflr Pr and NexGel Warrant 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 CEOs Directory module to screen CEOs from public companies around the world.