Correlation Between Mobile Max and Nextage Therapeutics

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

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

Diversification Opportunities for Mobile Max and Nextage Therapeutics

-0.6

Correlation Coefficient

Mobile Max  Nextage Therapeutics

Excellent diversification

The 3 months correlation between Mobile and Nextage is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Max M and Nextage Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextage Therapeutics and Mobile Max 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 Mobile Max M 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 Mobile Max i.e., Mobile Max and Nextage Therapeutics go up and down completely randomly.

Pair Corralation between Mobile Max and Nextage Therapeutics

Assuming the 90 days trading horizon Mobile Max M is expected to generate 1.02 times more return on investment than Nextage Therapeutics. However, Mobile Max is 1.02 times more volatile than Nextage Therapeutics. It trades about 0.16 of its potential returns per unit of risk. Nextage Therapeutics is currently generating about 0.0 per unit of risk. If you would invest  3,470  in Mobile Max M on October 11, 2024 and sell it today you would earn a total of  500.00  from holding Mobile Max M or generate 14.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Mobile Max M  vs.  Nextage Therapeutics

Mobile Max M

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Max M are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mobile Max sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Mobile Max and Nextage Therapeutics

The main advantage of trading using opposite Mobile Max and Nextage Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mobile Max 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 Mobile Max M 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.