Correlation Between NLS Pharmaceutics and Cingulate Warrants

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

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

Diversification Opportunities for NLS Pharmaceutics and Cingulate Warrants

0.45

Correlation Coefficient

NLS Pharmaceutics  Cingulate Warrants

Very weak diversification

The 3 months correlation between NLS and Cingulate is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding NLS Pharmaceutics AG and Cingulate Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate Warrants and NLS Pharmaceutics 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 NLS Pharmaceutics AG are associated (or correlated) with Cingulate Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate Warrants has no effect on the direction of NLS Pharmaceutics i.e., NLS Pharmaceutics and Cingulate Warrants go up and down completely randomly.

Pair Corralation between NLS Pharmaceutics and Cingulate Warrants

Assuming the 90 days horizon NLS Pharmaceutics AG is expected to generate 0.86 times more return on investment than Cingulate Warrants. However, NLS Pharmaceutics AG is 1.17 times less risky than Cingulate Warrants. It trades about 0.04 of its potential returns per unit of risk. Cingulate Warrants is currently generating about 0.03 per unit of risk. If you would invest  1.10  in NLS Pharmaceutics AG on December 5, 2024 and sell it today you would lose (0.10) from holding NLS Pharmaceutics AG or give up 9.09% of portfolio value over 90 days.

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

NLS Pharmaceutics AG  vs.  Cingulate Warrants

NLS Pharmaceutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NLS Pharmaceutics AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NLS Pharmaceutics showed solid returns over the last few months and may actually be approaching a breakup point.

Cingulate Warrants

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cingulate Warrants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Cingulate Warrants showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NLS Pharmaceutics and Cingulate Warrants

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

The idea behind NLS Pharmaceutics AG and Cingulate Warrants 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.