Correlation Between NextCure and Aligos Therapeutics

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

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

Diversification Opportunities for NextCure and Aligos Therapeutics

-0.9

Correlation Coefficient

NextCure  Aligos Therapeutics

Pay attention - limited upside

The 3 months correlation between NextCure and Aligos is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Aligos Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aligos Therapeutics and NextCure 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 NextCure are associated (or correlated) with Aligos Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aligos Therapeutics has no effect on the direction of NextCure i.e., NextCure and Aligos Therapeutics go up and down completely randomly.

Pair Corralation between NextCure and Aligos Therapeutics

Given the investment horizon of 90 days NextCure is expected to under-perform the Aligos Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, NextCure is 1.99 times less risky than Aligos Therapeutics. The stock trades about -0.18 of its potential returns per unit of risk. The Aligos Therapeutics is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  729.00  in Aligos Therapeutics on October 21, 2024 and sell it today you would earn a total of  2,695  from holding Aligos Therapeutics or generate 369.68% return on investment over 90 days.

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

NextCure  vs.  Aligos Therapeutics

NextCure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextCure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aligos Therapeutics

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aligos Therapeutics are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Aligos Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextCure and Aligos Therapeutics

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

The idea behind NextCure and Aligos Therapeutics 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 Transaction History module to view history of all your transactions and understand their impact on performance.