Correlation Between Neximmune and Longboard Pharmaceuticals

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

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

Diversification Opportunities for Neximmune and Longboard Pharmaceuticals

-0.72

Correlation Coefficient

Neximmune  Longboard Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Neximmune and Longboard is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Neximmune and Longboard Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longboard Pharmaceuticals and Neximmune 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 Neximmune are associated (or correlated) with Longboard Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longboard Pharmaceuticals has no effect on the direction of Neximmune i.e., Neximmune and Longboard Pharmaceuticals go up and down completely randomly.

Pair Corralation between Neximmune and Longboard Pharmaceuticals

Given the investment horizon of 90 days Neximmune is expected to generate 2.03 times less return on investment than Longboard Pharmaceuticals. In addition to that, Neximmune is 2.89 times more volatile than Longboard Pharmaceuticals. It trades about 0.03 of its total potential returns per unit of risk. Longboard Pharmaceuticals is currently generating about 0.17 per unit of volatility. If you would invest  2,082  in Longboard Pharmaceuticals on September 22, 2024 and sell it today you would earn a total of  3,916  from holding Longboard Pharmaceuticals or generate 188.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	14.78%
Values	Daily Returns

Neximmune  vs.  Longboard Pharmaceuticals

Neximmune

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neximmune has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Neximmune is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Longboard Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Longboard Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating basic indicators, Longboard Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neximmune and Longboard Pharmaceuticals

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

The idea behind Neximmune and Longboard Pharmaceuticals 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.