Correlation Between Nu Med and Rapid Micro

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

By analyzing existing cross correlation between Nu Med Plus and Rapid Micro Biosystems, you can compare the effects of market volatilities on Nu Med and Rapid Micro 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 Nu Med with a short position of Rapid Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nu Med and Rapid Micro.

Diversification Opportunities for Nu Med and Rapid Micro

-0.56

Correlation Coefficient

Nu Med  Rapid Micro

Excellent diversification

The 3 months correlation between NUMD and Rapid is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nu Med Plus and Rapid Micro Biosystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapid Micro Biosystems and Nu Med 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 Nu Med Plus are associated (or correlated) with Rapid Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapid Micro Biosystems has no effect on the direction of Nu Med i.e., Nu Med and Rapid Micro go up and down completely randomly.

Pair Corralation between Nu Med and Rapid Micro

Given the investment horizon of 90 days Nu Med Plus is expected to generate 4.37 times more return on investment than Rapid Micro. However, Nu Med is 4.37 times more volatile than Rapid Micro Biosystems. It trades about 0.07 of its potential returns per unit of risk. Rapid Micro Biosystems is currently generating about 0.01 per unit of risk. If you would invest  1.80  in Nu Med Plus on October 5, 2024 and sell it today you would lose (0.26) from holding Nu Med Plus or give up 14.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.63%
Values	Daily Returns

Nu Med Plus  vs.  Rapid Micro Biosystems

Nu Med Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rapid Micro Biosystems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nu Med and Rapid Micro

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

The idea behind Nu Med Plus and Rapid Micro Biosystems 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.