Correlation Between National HealthCare and NRX Pharmaceuticals

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

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

Diversification Opportunities for National HealthCare and NRX Pharmaceuticals

-0.76

Correlation Coefficient

National HealthCare  NRX Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between National and NRX is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding National HealthCare and NRX Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRX Pharmaceuticals and National HealthCare 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 National HealthCare are associated (or correlated) with NRX Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRX Pharmaceuticals has no effect on the direction of National HealthCare i.e., National HealthCare and NRX Pharmaceuticals go up and down completely randomly.

Pair Corralation between National HealthCare and NRX Pharmaceuticals

Considering the 90-day investment horizon National HealthCare is expected to generate 0.36 times more return on investment than NRX Pharmaceuticals. However, National HealthCare is 2.77 times less risky than NRX Pharmaceuticals. It trades about -0.19 of its potential returns per unit of risk. NRX Pharmaceuticals is currently generating about -0.27 per unit of risk. If you would invest  10,101  in National HealthCare on December 3, 2024 and sell it today you would lose (763.00) from holding National HealthCare or give up 7.55% of portfolio value over 90 days.

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

National HealthCare  vs.  NRX Pharmaceuticals

National HealthCare

Risk-Adjusted Performance

Very Weak

Over the last 90 days National HealthCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NRX Pharmaceuticals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NRX Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NRX Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National HealthCare and NRX Pharmaceuticals

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

The idea behind National HealthCare and NRX 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..