Correlation Between Nextgen Healthcare and Cogstate

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

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

Diversification Opportunities for Nextgen Healthcare and Cogstate

-0.31

Correlation Coefficient

Nextgen Healthcare  Cogstate

Very good diversification

The 3 months correlation between Nextgen and Cogstate is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nextgen Healthcare and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and Nextgen Healthcare 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 Nextgen Healthcare are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Nextgen Healthcare i.e., Nextgen Healthcare and Cogstate go up and down completely randomly.

Pair Corralation between Nextgen Healthcare and Cogstate

If you would invest  1,653  in Nextgen Healthcare on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Nextgen Healthcare or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Nextgen Healthcare  vs.  Cogstate Limited

Nextgen Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextgen Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Nextgen Healthcare is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Cogstate Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nextgen Healthcare and Cogstate

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

The idea behind Nextgen Healthcare and Cogstate Limited 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.