Correlation Between NervGen Pharma and PepGen

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

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

Diversification Opportunities for NervGen Pharma and PepGen

0.48

Correlation Coefficient

NervGen Pharma  PepGen

Very weak diversification

The 3 months correlation between NervGen and PepGen is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NervGen Pharma Corp and PepGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepGen and NervGen Pharma 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 NervGen Pharma Corp are associated (or correlated) with PepGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepGen has no effect on the direction of NervGen Pharma i.e., NervGen Pharma and PepGen go up and down completely randomly.

Pair Corralation between NervGen Pharma and PepGen

Assuming the 90 days horizon NervGen Pharma Corp is expected to generate 0.13 times more return on investment than PepGen. However, NervGen Pharma Corp is 7.75 times less risky than PepGen. It trades about -0.13 of its potential returns per unit of risk. PepGen is currently generating about -0.04 per unit of risk. If you would invest  216.00  in NervGen Pharma Corp on December 29, 2024 and sell it today you would lose (32.00) from holding NervGen Pharma Corp or give up 14.81% of portfolio value over 90 days.

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

NervGen Pharma Corp  vs.  PepGen

NervGen Pharma Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days NervGen Pharma Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PepGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepGen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NervGen Pharma and PepGen

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

The idea behind NervGen Pharma Corp and PepGen 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.