Correlation Between Nyxoah and Diageo PLC

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

By analyzing existing cross correlation between Nyxoah and Diageo PLC ADR, you can compare the effects of market volatilities on Nyxoah and Diageo PLC 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 Nyxoah with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nyxoah and Diageo PLC.

Diversification Opportunities for Nyxoah and Diageo PLC

0.16

Correlation Coefficient

Nyxoah  Diageo PLC

Average diversification

The 3 months correlation between Nyxoah and Diageo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nyxoah and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Nyxoah 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 Nyxoah are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Nyxoah i.e., Nyxoah and Diageo PLC go up and down completely randomly.

Pair Corralation between Nyxoah and Diageo PLC

Given the investment horizon of 90 days Nyxoah is expected to generate 4.03 times more return on investment than Diageo PLC. However, Nyxoah is 4.03 times more volatile than Diageo PLC ADR. It trades about 0.05 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.04 per unit of risk. If you would invest  535.00  in Nyxoah on October 23, 2024 and sell it today you would earn a total of  556.00  from holding Nyxoah or generate 103.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nyxoah  vs.  Diageo PLC ADR

Nyxoah

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nyxoah are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Nyxoah demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Diageo PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Nyxoah and Diageo PLC

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

The idea behind Nyxoah and Diageo PLC ADR 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.