Correlation Between Lees Pharmaceutical and Nexien Biopharma
Can any of the company-specific risk be diversified away by investing in both Lees Pharmaceutical and Nexien Biopharma 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 Lees Pharmaceutical and Nexien Biopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lees Pharmaceutical Holdings and Nexien Biopharma, you can compare the effects of market volatilities on Lees Pharmaceutical and Nexien Biopharma 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 Lees Pharmaceutical with a short position of Nexien Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lees Pharmaceutical and Nexien Biopharma.
Diversification Opportunities for Lees Pharmaceutical and Nexien Biopharma
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lees and Nexien is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lees Pharmaceutical Holdings and Nexien Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexien Biopharma and Lees Pharmaceutical 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 Lees Pharmaceutical Holdings are associated (or correlated) with Nexien Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexien Biopharma has no effect on the direction of Lees Pharmaceutical i.e., Lees Pharmaceutical and Nexien Biopharma go up and down completely randomly.
Pair Corralation between Lees Pharmaceutical and Nexien Biopharma
If you would invest 1.70 in Nexien Biopharma on September 6, 2024 and sell it today you would lose (0.30) from holding Nexien Biopharma or give up 17.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 1.59% |
Values | Daily Returns |
Lees Pharmaceutical Holdings vs. Nexien Biopharma
Performance |
Timeline |
Lees Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nexien Biopharma |
Lees Pharmaceutical and Nexien Biopharma Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lees Pharmaceutical and Nexien Biopharma
The main advantage of trading using opposite Lees Pharmaceutical and Nexien Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lees Pharmaceutical position performs unexpectedly, Nexien Biopharma 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 Nexien Biopharma will offset losses from the drop in Nexien Biopharma's long position.Lees Pharmaceutical vs. AKITA Drilling | Lees Pharmaceutical vs. Seadrill Limited | Lees Pharmaceutical vs. BorgWarner | Lees Pharmaceutical vs. Lucid Group |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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