Correlation Between Geron and NervGen Pharma

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

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

Diversification Opportunities for Geron and NervGen Pharma

0.69

Correlation Coefficient

Geron  NervGen Pharma

Poor diversification

The 3 months correlation between Geron and NervGen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Geron 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 Geron 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 Geron 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 Geron i.e., Geron and NervGen Pharma go up and down completely randomly.

Pair Corralation between Geron and NervGen Pharma

Given the investment horizon of 90 days Geron is expected to under-perform the NervGen Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Geron is 1.73 times less risky than NervGen Pharma. The stock trades about -0.02 of its potential returns per unit of risk. The NervGen Pharma Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  200.00  in NervGen Pharma Corp on August 31, 2024 and sell it today you would earn a total of  0.00  from holding NervGen Pharma Corp or generate 0.0% return on investment over 90 days.

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

Geron  vs.  NervGen Pharma Corp

Geron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Geron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Geron is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

NervGen Pharma Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NervGen Pharma Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, NervGen Pharma may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Geron and NervGen Pharma

The main advantage of trading using opposite Geron and NervGen Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geron 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 Geron 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.