Correlation Between Aptose Biosciences and NervGen Pharma

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

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

Diversification Opportunities for Aptose Biosciences and NervGen Pharma

-0.56

Correlation Coefficient

Aptose Biosciences  NervGen Pharma

Excellent diversification

The 3 months correlation between Aptose and NervGen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aptose Biosciences and NervGen Pharma Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NervGen Pharma Corp and Aptose Biosciences 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 Aptose Biosciences are associated (or correlated) with NervGen Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NervGen Pharma Corp has no effect on the direction of Aptose Biosciences i.e., Aptose Biosciences and NervGen Pharma go up and down completely randomly.

Pair Corralation between Aptose Biosciences and NervGen Pharma

Assuming the 90 days trading horizon Aptose Biosciences is expected to generate 2.42 times more return on investment than NervGen Pharma. However, Aptose Biosciences is 2.42 times more volatile than NervGen Pharma Corp. It trades about 0.19 of its potential returns per unit of risk. NervGen Pharma Corp is currently generating about 0.11 per unit of risk. If you would invest  26.00  in Aptose Biosciences on September 24, 2024 and sell it today you would earn a total of  16.00  from holding Aptose Biosciences or generate 61.54% return on investment over 90 days.

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

Aptose Biosciences  vs.  NervGen Pharma Corp

Aptose Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptose Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Aptose Biosciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NervGen Pharma Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NervGen Pharma Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, NervGen Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aptose Biosciences and NervGen Pharma

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

The idea behind Aptose Biosciences and NervGen Pharma Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.