Correlation Between Alcon AG and Nexgel

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

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

Diversification Opportunities for Alcon AG and Nexgel

-0.6

Correlation Coefficient

Alcon AG  Nexgel

Excellent diversification

The 3 months correlation between Alcon and Nexgel is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alcon AG and Nexgel Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexgel Inc and Alcon AG 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 Alcon AG are associated (or correlated) with Nexgel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexgel Inc has no effect on the direction of Alcon AG i.e., Alcon AG and Nexgel go up and down completely randomly.

Pair Corralation between Alcon AG and Nexgel

Considering the 90-day investment horizon Alcon AG is expected to generate 0.35 times more return on investment than Nexgel. However, Alcon AG is 2.83 times less risky than Nexgel. It trades about 0.12 of its potential returns per unit of risk. Nexgel Inc is currently generating about -0.14 per unit of risk. If you would invest  8,565  in Alcon AG on December 27, 2024 and sell it today you would earn a total of  1,054  from holding Alcon AG or generate 12.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Alcon AG  vs.  Nexgel Inc

Alcon AG

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alcon AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Alcon AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nexgel Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexgel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Alcon AG and Nexgel

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

The idea behind Alcon AG and Nexgel Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.