Correlation Between Link Reservations and Nexien Biopharma

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

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

Diversification Opportunities for Link Reservations and Nexien Biopharma

0.35

Correlation Coefficient

Link Reservations  Nexien Biopharma

Weak diversification

The 3 months correlation between Link and Nexien is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and Nexien Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexien Biopharma and Link Reservations 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 Link Reservations 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 Link Reservations i.e., Link Reservations and Nexien Biopharma go up and down completely randomly.

Pair Corralation between Link Reservations and Nexien Biopharma

Given the investment horizon of 90 days Link Reservations is expected to generate 6.79 times less return on investment than Nexien Biopharma. But when comparing it to its historical volatility, Link Reservations is 1.68 times less risky than Nexien Biopharma. It trades about 0.04 of its potential returns per unit of risk. Nexien Biopharma is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Nexien Biopharma on September 9, 2024 and sell it today you would earn a total of  0.20  from holding Nexien Biopharma or generate 11.76% return on investment over 90 days.

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

Link Reservations  vs.  Nexien Biopharma

Link Reservations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Link Reservations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Link Reservations showed solid returns over the last few months and may actually be approaching a breakup point.

Nexien Biopharma

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexien Biopharma are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Nexien Biopharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Link Reservations and Nexien Biopharma

The main advantage of trading using opposite Link Reservations and Nexien Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Reservations 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.

The idea behind Link Reservations and Nexien Biopharma 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.