Correlation Between Nexgel and BioLife Sciences

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

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

Diversification Opportunities for Nexgel and BioLife Sciences

0.0

Correlation Coefficient

Nexgel  BioLife Sciences

Pay attention - limited upside

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

Pair Corralation between Nexgel and BioLife Sciences

Given the investment horizon of 90 days Nexgel is expected to generate 27.22 times less return on investment than BioLife Sciences. But when comparing it to its historical volatility, Nexgel Inc is 19.73 times less risky than BioLife Sciences. It trades about 0.08 of its potential returns per unit of risk. BioLife Sciences is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.90  in BioLife Sciences on September 14, 2024 and sell it today you would lose (0.89) from holding BioLife Sciences or give up 98.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nexgel Inc  vs.  BioLife Sciences

Nexgel Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexgel Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Nexgel disclosed solid returns over the last few months and may actually be approaching a breakup point.

BioLife Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioLife Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, BioLife Sciences is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nexgel and BioLife Sciences

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

The idea behind Nexgel Inc and BioLife Sciences 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .