Correlation Between NRx Pharmaceuticals and Biofrontera

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

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

Diversification Opportunities for NRx Pharmaceuticals and Biofrontera

0.0

Correlation Coefficient

NRx Pharmaceuticals  Biofrontera

Pay attention - limited upside

The 3 months correlation between NRx and Biofrontera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NRx Pharmaceuticals and Biofrontera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biofrontera and NRx Pharmaceuticals 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 NRx Pharmaceuticals are associated (or correlated) with Biofrontera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biofrontera has no effect on the direction of NRx Pharmaceuticals i.e., NRx Pharmaceuticals and Biofrontera go up and down completely randomly.

Pair Corralation between NRx Pharmaceuticals and Biofrontera

Assuming the 90 days horizon NRx Pharmaceuticals is expected to generate 12.73 times more return on investment than Biofrontera. However, NRx Pharmaceuticals is 12.73 times more volatile than Biofrontera. It trades about 0.1 of its potential returns per unit of risk. Biofrontera is currently generating about 0.05 per unit of risk. If you would invest  6.01  in NRx Pharmaceuticals on September 26, 2024 and sell it today you would earn a total of  0.99  from holding NRx Pharmaceuticals or generate 16.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.4%
Values	Daily Returns

NRx Pharmaceuticals  vs.  Biofrontera

NRx Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NRx Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, NRx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Biofrontera

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NRx Pharmaceuticals and Biofrontera

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

The idea behind NRx Pharmaceuticals and Biofrontera 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.