Correlation Between Nordic Asia and AlzeCure Pharma

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

By analyzing existing cross correlation between Nordic Asia Investment and AlzeCure Pharma, you can compare the effects of market volatilities on Nordic Asia and AlzeCure Pharma 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 Nordic Asia with a short position of AlzeCure Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Asia and AlzeCure Pharma.

Diversification Opportunities for Nordic Asia and AlzeCure Pharma

-0.02

Correlation Coefficient

Nordic Asia  AlzeCure Pharma

Good diversification

The 3 months correlation between Nordic and AlzeCure is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Asia Investment and AlzeCure Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AlzeCure Pharma and Nordic Asia 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 Nordic Asia Investment are associated (or correlated) with AlzeCure Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AlzeCure Pharma has no effect on the direction of Nordic Asia i.e., Nordic Asia and AlzeCure Pharma go up and down completely randomly.

Pair Corralation between Nordic Asia and AlzeCure Pharma

Assuming the 90 days trading horizon Nordic Asia Investment is expected to under-perform the AlzeCure Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Asia Investment is 2.69 times less risky than AlzeCure Pharma. The stock trades about -0.07 of its potential returns per unit of risk. The AlzeCure Pharma is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  180.00  in AlzeCure Pharma on October 26, 2024 and sell it today you would lose (23.00) from holding AlzeCure Pharma or give up 12.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nordic Asia Investment  vs.  AlzeCure Pharma

Nordic Asia Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AlzeCure Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AlzeCure Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AlzeCure Pharma is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nordic Asia and AlzeCure Pharma

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

The idea behind Nordic Asia Investment and AlzeCure Pharma 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.