Correlation Between Nurix Therapeutics and Adagene

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

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

Diversification Opportunities for Nurix Therapeutics and Adagene

0.72

Correlation Coefficient

Nurix Therapeutics  Adagene

Poor diversification

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

Pair Corralation between Nurix Therapeutics and Adagene

Given the investment horizon of 90 days Nurix Therapeutics is expected to under-perform the Adagene. But the stock apears to be less risky and, when comparing its historical volatility, Nurix Therapeutics is 2.29 times less risky than Adagene. The stock trades about -0.03 of its potential returns per unit of risk. The Adagene is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Adagene on October 6, 2024 and sell it today you would lose (13.00) from holding Adagene or give up 6.05% of portfolio value over 90 days.

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

Nurix Therapeutics  vs.  Adagene

Nurix Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nurix Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Nurix Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adagene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adagene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adagene is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nurix Therapeutics and Adagene

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

The idea behind Nurix Therapeutics and Adagene 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.