Correlation Between NextCure and Assembly Biosciences

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

By analyzing existing cross correlation between NextCure and Assembly Biosciences, you can compare the effects of market volatilities on NextCure and Assembly Biosciences 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 Assembly Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextCure and Assembly Biosciences.

Diversification Opportunities for NextCure and Assembly Biosciences

0.8

Correlation Coefficient

NextCure  Assembly Biosciences

Very poor diversification

The 3 months correlation between NextCure and Assembly is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Assembly Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assembly Biosciences 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 Assembly Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assembly Biosciences has no effect on the direction of NextCure i.e., NextCure and Assembly Biosciences go up and down completely randomly.

Pair Corralation between NextCure and Assembly Biosciences

Given the investment horizon of 90 days NextCure is expected to under-perform the Assembly Biosciences. In addition to that, NextCure is 1.31 times more volatile than Assembly Biosciences. It trades about -0.16 of its total potential returns per unit of risk. Assembly Biosciences is currently generating about -0.18 per unit of volatility. If you would invest  1,603  in Assembly Biosciences on December 30, 2024 and sell it today you would lose (541.00) from holding Assembly Biosciences or give up 33.75% of portfolio value over 90 days.

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

NextCure  vs.  Assembly Biosciences

NextCure

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Assembly Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Assembly Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NextCure and Assembly Biosciences

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

The idea behind NextCure and Assembly Biosciences 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.