Correlation Between Annexin Pharmaceuticals and NextCell Pharma

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

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

Diversification Opportunities for Annexin Pharmaceuticals and NextCell Pharma

-0.11

Correlation Coefficient

Annexin Pharmaceuticals  NextCell Pharma

Good diversification

The 3 months correlation between Annexin and NextCell is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Annexin Pharmaceuticals AB and NextCell Pharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCell Pharma AB and Annexin Pharmaceuticals 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 Annexin Pharmaceuticals AB are associated (or correlated) with NextCell Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCell Pharma AB has no effect on the direction of Annexin Pharmaceuticals i.e., Annexin Pharmaceuticals and NextCell Pharma go up and down completely randomly.

Pair Corralation between Annexin Pharmaceuticals and NextCell Pharma

Assuming the 90 days trading horizon Annexin Pharmaceuticals AB is expected to under-perform the NextCell Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Annexin Pharmaceuticals AB is 1.38 times less risky than NextCell Pharma. The stock trades about -0.1 of its potential returns per unit of risk. The NextCell Pharma AB is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  175.00  in NextCell Pharma AB on November 29, 2024 and sell it today you would earn a total of  165.00  from holding NextCell Pharma AB or generate 94.29% return on investment over 90 days.

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

Annexin Pharmaceuticals AB  vs.  NextCell Pharma AB

Annexin Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Annexin Pharmaceuticals AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NextCell Pharma AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NextCell Pharma AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NextCell Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Annexin Pharmaceuticals and NextCell Pharma

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

The idea behind Annexin Pharmaceuticals AB and NextCell Pharma AB 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.