Correlation Between Berkshire Hathaway and Nexien Biopharma

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

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

Diversification Opportunities for Berkshire Hathaway and Nexien Biopharma

-0.43

Correlation Coefficient

Berkshire Hathaway  Nexien Biopharma

Very good diversification

The 3 months correlation between Berkshire and Nexien is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Nexien Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexien Biopharma and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Nexien Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexien Biopharma has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Nexien Biopharma go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Nexien Biopharma

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 120.3 times less return on investment than Nexien Biopharma. But when comparing it to its historical volatility, Berkshire Hathaway is 32.73 times less risky than Nexien Biopharma. It trades about 0.04 of its potential returns per unit of risk. Nexien Biopharma is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Nexien Biopharma on September 10, 2024 and sell it today you would earn a total of  0.20  from holding Nexien Biopharma or generate 11.76% return on investment over 90 days.

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

Berkshire Hathaway  vs.  Nexien Biopharma

Berkshire Hathaway

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nexien Biopharma

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexien Biopharma are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Nexien Biopharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Nexien Biopharma

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

The idea behind Berkshire Hathaway and Nexien Biopharma 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .