Correlation Between Nexgel and NLS Pharmaceutics

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

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

Diversification Opportunities for Nexgel and NLS Pharmaceutics

-0.11

Correlation Coefficient

Nexgel  NLS Pharmaceutics

Good diversification

The 3 months correlation between Nexgel and NLS is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nexgel Inc and NLS Pharmaceutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NLS Pharmaceutics 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 NLS Pharmaceutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NLS Pharmaceutics has no effect on the direction of Nexgel i.e., Nexgel and NLS Pharmaceutics go up and down completely randomly.

Pair Corralation between Nexgel and NLS Pharmaceutics

Given the investment horizon of 90 days Nexgel is expected to generate 6.28 times less return on investment than NLS Pharmaceutics. But when comparing it to its historical volatility, Nexgel Inc is 6.92 times less risky than NLS Pharmaceutics. It trades about 0.22 of its potential returns per unit of risk. NLS Pharmaceutics AG is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1.00  in NLS Pharmaceutics AG on October 4, 2024 and sell it today you would earn a total of  0.30  from holding NLS Pharmaceutics AG or generate 30.0% return on investment over 90 days.

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

Nexgel Inc  vs.  NLS Pharmaceutics AG

Nexgel Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexgel Inc are ranked lower than 16 (%) 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.

NLS Pharmaceutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NLS Pharmaceutics AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NLS Pharmaceutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexgel and NLS Pharmaceutics

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

The idea behind Nexgel Inc and NLS Pharmaceutics AG 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..