Correlation Between NextCell Pharma and Annexin Pharmaceuticals

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

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

Diversification Opportunities for NextCell Pharma and Annexin Pharmaceuticals

-0.11

Correlation Coefficient

NextCell Pharma  Annexin Pharmaceuticals

Good diversification

The 3 months correlation between NextCell and Annexin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NextCell Pharma AB and Annexin Pharmaceuticals AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexin Pharmaceuticals and NextCell Pharma 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 NextCell Pharma AB are associated (or correlated) with Annexin Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexin Pharmaceuticals has no effect on the direction of NextCell Pharma i.e., NextCell Pharma and Annexin Pharmaceuticals go up and down completely randomly.

Pair Corralation between NextCell Pharma and Annexin Pharmaceuticals

Assuming the 90 days trading horizon NextCell Pharma AB is expected to generate 1.38 times more return on investment than Annexin Pharmaceuticals. However, NextCell Pharma is 1.38 times more volatile than Annexin Pharmaceuticals AB. It trades about 0.19 of its potential returns per unit of risk. Annexin Pharmaceuticals AB is currently generating about -0.1 per unit of risk. If you would invest  175.00  in NextCell Pharma AB on November 29, 2024 and sell it today you would earn a total of  165.00  from holding NextCell Pharma AB or generate 94.29% return on investment over 90 days.

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

NextCell Pharma AB  vs.  Annexin Pharmaceuticals AB

NextCell Pharma AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NextCell Pharma AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NextCell Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Annexin Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Annexin Pharmaceuticals AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NextCell Pharma and Annexin Pharmaceuticals

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

The idea behind NextCell Pharma AB and Annexin Pharmaceuticals AB 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.