Correlation Between Internet Gold and Nextage Therapeutics

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

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

Diversification Opportunities for Internet Gold and Nextage Therapeutics

-0.46

Correlation Coefficient

Internet Gold  Nextage Therapeutics

Very good diversification

The 3 months correlation between Internet and Nextage is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Internet Gold Golden and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics and Internet Gold 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 Internet Gold Golden are associated (or correlated) with Nextage Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextage Therapeutics has no effect on the direction of Internet Gold i.e., Internet Gold and Nextage Therapeutics go up and down completely randomly.

Pair Corralation between Internet Gold and Nextage Therapeutics

Assuming the 90 days trading horizon Internet Gold is expected to generate 37.72 times less return on investment than Nextage Therapeutics. But when comparing it to its historical volatility, Internet Gold Golden is 1.34 times less risky than Nextage Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Nextage Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,400  in Nextage Therapeutics on September 12, 2024 and sell it today you would earn a total of  2,450  from holding Nextage Therapeutics or generate 45.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

Internet Gold Golden  vs.  Nextage Therapeutics

Internet Gold Golden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Internet Gold Golden has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nextage Therapeutics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nextage Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nextage Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Internet Gold and Nextage Therapeutics

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

The idea behind Internet Gold Golden and Nextage Therapeutics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.