Correlation Between Nextage Therapeutics and Sure Tech

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

By analyzing existing cross correlation between Nextage Therapeutics and Sure Tech Investments LP, you can compare the effects of market volatilities on Nextage Therapeutics and Sure Tech 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 Sure Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextage Therapeutics and Sure Tech.

Diversification Opportunities for Nextage Therapeutics and Sure Tech

0.09

Correlation Coefficient

Nextage Therapeutics  Sure Tech

Significant diversification

The 3 months correlation between Nextage and Sure is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nextage Therapeutics and Sure Tech Investments LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sure Tech Investments 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 Sure Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sure Tech Investments has no effect on the direction of Nextage Therapeutics i.e., Nextage Therapeutics and Sure Tech go up and down completely randomly.

Pair Corralation between Nextage Therapeutics and Sure Tech

Assuming the 90 days trading horizon Nextage Therapeutics is expected to under-perform the Sure Tech. In addition to that, Nextage Therapeutics is 1.07 times more volatile than Sure Tech Investments LP. It trades about -0.02 of its total potential returns per unit of risk. Sure Tech Investments LP is currently generating about 0.32 per unit of volatility. If you would invest  56,400  in Sure Tech Investments LP on October 11, 2024 and sell it today you would earn a total of  15,010  from holding Sure Tech Investments LP or generate 26.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Nextage Therapeutics  vs.  Sure Tech Investments LP

Nextage Therapeutics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nextage Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nextage Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Sure Tech Investments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sure Tech Investments LP are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sure Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextage Therapeutics and Sure Tech

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

The idea behind Nextage Therapeutics and Sure Tech Investments LP 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..