Correlation Between Lincoln Electric and Nyxoah

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

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

Diversification Opportunities for Lincoln Electric and Nyxoah

0.23

Correlation Coefficient

Lincoln Electric  Nyxoah

Modest diversification

The 3 months correlation between Lincoln and Nyxoah is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Nyxoah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyxoah and Lincoln Electric 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 Lincoln Electric Holdings are associated (or correlated) with Nyxoah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyxoah has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Nyxoah go up and down completely randomly.

Pair Corralation between Lincoln Electric and Nyxoah

Given the investment horizon of 90 days Lincoln Electric is expected to generate 8.77 times less return on investment than Nyxoah. But when comparing it to its historical volatility, Lincoln Electric Holdings is 1.55 times less risky than Nyxoah. It trades about 0.03 of its potential returns per unit of risk. Nyxoah is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  801.00  in Nyxoah on December 20, 2024 and sell it today you would earn a total of  304.00  from holding Nyxoah or generate 37.95% return on investment over 90 days.

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

Lincoln Electric Holdings  vs.  Nyxoah

Lincoln Electric Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Lincoln Electric is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Nyxoah

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nyxoah are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Nyxoah demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lincoln Electric and Nyxoah

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

The idea behind Lincoln Electric Holdings and Nyxoah 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.