Correlation Between Cogstate and Nutex Health

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

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

Diversification Opportunities for Cogstate and Nutex Health

0.58

Correlation Coefficient

Cogstate  Nutex Health

Very weak diversification

The 3 months correlation between Cogstate and Nutex is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cogstate Limited and Nutex Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutex Health and Cogstate 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 Cogstate Limited are associated (or correlated) with Nutex Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutex Health has no effect on the direction of Cogstate i.e., Cogstate and Nutex Health go up and down completely randomly.

Pair Corralation between Cogstate and Nutex Health

Assuming the 90 days horizon Cogstate Limited is expected to generate 0.8 times more return on investment than Nutex Health. However, Cogstate Limited is 1.24 times less risky than Nutex Health. It trades about -0.09 of its potential returns per unit of risk. Nutex Health is currently generating about -0.1 per unit of risk. If you would invest  68.00  in Cogstate Limited on October 7, 2024 and sell it today you would lose (5.00) from holding Cogstate Limited or give up 7.35% of portfolio value over 90 days.

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

Cogstate Limited  vs.  Nutex Health

Cogstate Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nutex Health

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nutex Health are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nutex Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogstate and Nutex Health

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

The idea behind Cogstate Limited and Nutex Health 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.