Correlation Between Egetis Therapeutics and NextCell Pharma

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

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

Diversification Opportunities for Egetis Therapeutics and NextCell Pharma

-0.6

Correlation Coefficient

Egetis Therapeutics  NextCell Pharma

Excellent diversification

The 3 months correlation between Egetis and NextCell is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Egetis Therapeutics 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 Egetis Therapeutics 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 Egetis Therapeutics 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 Egetis Therapeutics i.e., Egetis Therapeutics and NextCell Pharma go up and down completely randomly.

Pair Corralation between Egetis Therapeutics and NextCell Pharma

Assuming the 90 days trading horizon Egetis Therapeutics AB is expected to under-perform the NextCell Pharma. In addition to that, Egetis Therapeutics is 1.05 times more volatile than NextCell Pharma AB. It trades about -0.01 of its total potential returns per unit of risk. NextCell Pharma AB is currently generating about 0.14 per unit of volatility. If you would invest  128.00  in NextCell Pharma AB on August 31, 2024 and sell it today you would earn a total of  49.00  from holding NextCell Pharma AB or generate 38.28% return on investment over 90 days.

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

Egetis Therapeutics AB  vs.  NextCell Pharma AB

Egetis Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Egetis Therapeutics AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Egetis Therapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

NextCell Pharma AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NextCell Pharma AB are ranked lower than 11 (%) 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 Egetis Therapeutics and NextCell Pharma

The main advantage of trading using opposite Egetis Therapeutics and NextCell Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Egetis Therapeutics 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 Egetis Therapeutics 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.