Correlation Between Nyxoah and Virco Manufacturing

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Can any of the company-specific risk be diversified away by investing in both Nyxoah and Virco Manufacturing 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 Virco Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nyxoah and Virco Manufacturing, you can compare the effects of market volatilities on Nyxoah and Virco Manufacturing 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 Virco Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nyxoah and Virco Manufacturing.

Diversification Opportunities for Nyxoah and Virco Manufacturing

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nyxoah and Virco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nyxoah and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Nyxoah i.e., Nyxoah and Virco Manufacturing go up and down completely randomly.

Pair Corralation between Nyxoah and Virco Manufacturing

Given the investment horizon of 90 days Nyxoah is expected to under-perform the Virco Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, Nyxoah is 1.64 times less risky than Virco Manufacturing. The stock trades about -0.34 of its potential returns per unit of risk. The Virco Manufacturing is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,409  in Virco Manufacturing on September 5, 2024 and sell it today you would earn a total of  199.00  from holding Virco Manufacturing or generate 14.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nyxoah  vs.  Virco Manufacturing

 Performance 
       Timeline  
Nyxoah 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nyxoah are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Nyxoah may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Virco Manufacturing 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Virco Manufacturing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Virco Manufacturing exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nyxoah and Virco Manufacturing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nyxoah and Virco Manufacturing

The main advantage of trading using opposite Nyxoah and Virco Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nyxoah position performs unexpectedly, Virco Manufacturing 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 Virco Manufacturing will offset losses from the drop in Virco Manufacturing's long position.
The idea behind Nyxoah and Virco Manufacturing 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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