Correlation Between NL Industries and COSCIENS Biopharma

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

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

Diversification Opportunities for NL Industries and COSCIENS Biopharma

-0.46

Correlation Coefficient

NL Industries  COSCIENS Biopharma

Very good diversification

The 3 months correlation between NL Industries and COSCIENS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and COSCIENS Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCIENS Biopharma and NL Industries 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 NL Industries are associated (or correlated) with COSCIENS Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCIENS Biopharma has no effect on the direction of NL Industries i.e., NL Industries and COSCIENS Biopharma go up and down completely randomly.

Pair Corralation between NL Industries and COSCIENS Biopharma

Allowing for the 90-day total investment horizon NL Industries is expected to under-perform the COSCIENS Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, NL Industries is 2.25 times less risky than COSCIENS Biopharma. The stock trades about -0.06 of its potential returns per unit of risk. The COSCIENS Biopharma is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  266.00  in COSCIENS Biopharma on October 8, 2024 and sell it today you would earn a total of  70.00  from holding COSCIENS Biopharma or generate 26.32% return on investment over 90 days.

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

NL Industries  vs.  COSCIENS Biopharma

NL Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, NL Industries is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

COSCIENS Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NL Industries and COSCIENS Biopharma

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

The idea behind NL Industries and COSCIENS Biopharma 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.