Correlation Between Perimeter Medical and NervGen Pharma

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

By analyzing existing cross correlation between Perimeter Medical Imaging and NervGen Pharma Corp, you can compare the effects of market volatilities on Perimeter Medical and NervGen Pharma 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 Perimeter Medical with a short position of NervGen Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perimeter Medical and NervGen Pharma.

Diversification Opportunities for Perimeter Medical and NervGen Pharma

-0.55

Correlation Coefficient

Perimeter Medical  NervGen Pharma

Excellent diversification

The 3 months correlation between Perimeter and NervGen is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Medical Imaging and NervGen Pharma Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NervGen Pharma Corp and Perimeter Medical 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 Perimeter Medical Imaging are associated (or correlated) with NervGen Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NervGen Pharma Corp has no effect on the direction of Perimeter Medical i.e., Perimeter Medical and NervGen Pharma go up and down completely randomly.

Pair Corralation between Perimeter Medical and NervGen Pharma

Assuming the 90 days trading horizon Perimeter Medical Imaging is expected to under-perform the NervGen Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Perimeter Medical Imaging is 1.2 times less risky than NervGen Pharma. The stock trades about -0.2 of its potential returns per unit of risk. The NervGen Pharma Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  256.00  in NervGen Pharma Corp on October 9, 2024 and sell it today you would earn a total of  53.00  from holding NervGen Pharma Corp or generate 20.7% return on investment over 90 days.

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

Perimeter Medical Imaging  vs.  NervGen Pharma Corp

Perimeter Medical Imaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perimeter Medical Imaging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Perimeter Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NervGen Pharma Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NervGen Pharma Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, NervGen Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Perimeter Medical and NervGen Pharma

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

The idea behind Perimeter Medical Imaging and NervGen Pharma Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.