Correlation Between Nexgel and Avinger

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

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

Diversification Opportunities for Nexgel and Avinger

0.05

Correlation Coefficient

Nexgel  Avinger

Significant diversification

The 3 months correlation between Nexgel and Avinger is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nexgel Inc and Avinger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avinger and Nexgel 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 Nexgel Inc are associated (or correlated) with Avinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avinger has no effect on the direction of Nexgel i.e., Nexgel and Avinger go up and down completely randomly.

Pair Corralation between Nexgel and Avinger

Given the investment horizon of 90 days Nexgel is expected to generate 7.76 times less return on investment than Avinger. But when comparing it to its historical volatility, Nexgel Inc is 4.56 times less risky than Avinger. It trades about 0.02 of its potential returns per unit of risk. Avinger is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Avinger on November 29, 2024 and sell it today you would lose (37.00) from holding Avinger or give up 44.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.83%
Values	Daily Returns

Nexgel Inc  vs.  Avinger

Nexgel Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nexgel Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Nexgel may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Avinger

Risk-Adjusted Performance

Insignificant

Over the last 90 days Avinger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively conflicting technical and fundamental indicators, Avinger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexgel and Avinger

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

The idea behind Nexgel Inc and Avinger 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.