Correlation Between NextCure and Oric Pharmaceuticals

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

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

Diversification Opportunities for NextCure and Oric Pharmaceuticals

0.48

Correlation Coefficient

NextCure  Oric Pharmaceuticals

Very weak diversification

The 3 months correlation between NextCure and Oric is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Oric Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oric Pharmaceuticals 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 Oric Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oric Pharmaceuticals has no effect on the direction of NextCure i.e., NextCure and Oric Pharmaceuticals go up and down completely randomly.

Pair Corralation between NextCure and Oric Pharmaceuticals

Given the investment horizon of 90 days NextCure is expected to under-perform the Oric Pharmaceuticals. In addition to that, NextCure is 1.1 times more volatile than Oric Pharmaceuticals. It trades about -0.26 of its total potential returns per unit of risk. Oric Pharmaceuticals is currently generating about -0.24 per unit of volatility. If you would invest  987.00  in Oric Pharmaceuticals on September 24, 2024 and sell it today you would lose (166.00) from holding Oric Pharmaceuticals or give up 16.82% of portfolio value over 90 days.

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

NextCure  vs.  Oric Pharmaceuticals

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

Oric Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NextCure and Oric Pharmaceuticals

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

The idea behind NextCure and Oric Pharmaceuticals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.