Correlation Between Nexgel and Wearable Health

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

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

Diversification Opportunities for Nexgel and Wearable Health

0.0

Correlation Coefficient

Nexgel  Wearable Health

Pay attention - limited upside

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

Pair Corralation between Nexgel and Wearable Health

If you would invest  350.00  in Nexgel Inc on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Nexgel Inc or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nexgel Inc  vs.  Wearable Health Solutions

Nexgel Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexgel Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Nexgel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Wearable Health Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nexgel and Wearable Health

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

The idea behind Nexgel Inc and Wearable Health Solutions 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.