Correlation Between Healthcare Triangle and NexGel Warrant

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

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

Diversification Opportunities for Healthcare Triangle and NexGel Warrant

-0.06

Correlation Coefficient

Healthcare Triangle  NexGel Warrant

Good diversification

The 3 months correlation between Healthcare and NexGel is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Healthcare Triangle and NexGel Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGel Warrant and Healthcare Triangle 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 Healthcare Triangle are associated (or correlated) with NexGel Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGel Warrant has no effect on the direction of Healthcare Triangle i.e., Healthcare Triangle and NexGel Warrant go up and down completely randomly.

Pair Corralation between Healthcare Triangle and NexGel Warrant

Given the investment horizon of 90 days Healthcare Triangle is expected to generate 2.26 times less return on investment than NexGel Warrant. In addition to that, Healthcare Triangle is 1.25 times more volatile than NexGel Warrant. It trades about 0.04 of its total potential returns per unit of risk. NexGel Warrant is currently generating about 0.12 per unit of volatility. If you would invest  55.00  in NexGel Warrant on October 6, 2024 and sell it today you would earn a total of  20.00  from holding NexGel Warrant or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Healthcare Triangle  vs.  NexGel Warrant

Healthcare Triangle

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthcare Triangle are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Healthcare Triangle demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NexGel Warrant

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NexGel Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Healthcare Triangle and NexGel Warrant

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

The idea behind Healthcare Triangle and NexGel Warrant 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 Anywhere module to track or share privately all of your investments from the convenience of any device.