Correlation Between Nextage Therapeutics and Israel China

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

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

Diversification Opportunities for Nextage Therapeutics and Israel China

-0.21

Correlation Coefficient

Nextage Therapeutics  Israel China

Very good diversification

The 3 months correlation between Nextage and Israel is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nextage Therapeutics and Israel China Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel China Biotech and Nextage Therapeutics 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 Nextage Therapeutics are associated (or correlated) with Israel China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel China Biotech has no effect on the direction of Nextage Therapeutics i.e., Nextage Therapeutics and Israel China go up and down completely randomly.

Pair Corralation between Nextage Therapeutics and Israel China

Assuming the 90 days trading horizon Nextage Therapeutics is expected to generate 1.13 times more return on investment than Israel China. However, Nextage Therapeutics is 1.13 times more volatile than Israel China Biotechnology. It trades about 0.03 of its potential returns per unit of risk. Israel China Biotechnology is currently generating about -0.08 per unit of risk. If you would invest  6,700  in Nextage Therapeutics on September 3, 2024 and sell it today you would earn a total of  70.00  from holding Nextage Therapeutics or generate 1.04% return on investment over 90 days.

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

Nextage Therapeutics  vs.  Israel China Biotechnology

Nextage Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nextage Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nextage Therapeutics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Israel China Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nextage Therapeutics and Israel China

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

The idea behind Nextage Therapeutics and Israel China Biotechnology 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.