Correlation Between Nexalin Technology and Lifeline Biotechnologies

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

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

Diversification Opportunities for Nexalin Technology and Lifeline Biotechnologies

-0.1

Correlation Coefficient

Nexalin Technology  Lifeline Biotechnologies

Good diversification

The 3 months correlation between Nexalin and Lifeline is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nexalin Technology and Lifeline Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeline Biotechnologies and Nexalin Technology 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 Nexalin Technology are associated (or correlated) with Lifeline Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeline Biotechnologies has no effect on the direction of Nexalin Technology i.e., Nexalin Technology and Lifeline Biotechnologies go up and down completely randomly.

Pair Corralation between Nexalin Technology and Lifeline Biotechnologies

Considering the 90-day investment horizon Nexalin Technology is expected to generate 4.31 times less return on investment than Lifeline Biotechnologies. But when comparing it to its historical volatility, Nexalin Technology is 5.27 times less risky than Lifeline Biotechnologies. It trades about 0.23 of its potential returns per unit of risk. Lifeline Biotechnologies is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Lifeline Biotechnologies on October 11, 2024 and sell it today you would lose (0.04) from holding Lifeline Biotechnologies or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Nexalin Technology  vs.  Lifeline Biotechnologies

Nexalin Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Nexalin Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lifeline Biotechnologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifeline Biotechnologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Lifeline Biotechnologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexalin Technology and Lifeline Biotechnologies

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

The idea behind Nexalin Technology and Lifeline Biotechnologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.