Correlation Between Tetragon Financial and NX Filtration

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

By analyzing existing cross correlation between Tetragon Financial Group and NX Filtration Holding, you can compare the effects of market volatilities on Tetragon Financial and NX Filtration 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 Tetragon Financial with a short position of NX Filtration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and NX Filtration.

Diversification Opportunities for Tetragon Financial and NX Filtration

-0.33

Correlation Coefficient

Tetragon Financial  NX Filtration

Very good diversification

The 3 months correlation between Tetragon and NXFIL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group and NX Filtration Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NX Filtration Holding and Tetragon Financial 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 Tetragon Financial Group are associated (or correlated) with NX Filtration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NX Filtration Holding has no effect on the direction of Tetragon Financial i.e., Tetragon Financial and NX Filtration go up and down completely randomly.

Pair Corralation between Tetragon Financial and NX Filtration

Assuming the 90 days trading horizon Tetragon Financial Group is expected to generate 1.35 times more return on investment than NX Filtration. However, Tetragon Financial is 1.35 times more volatile than NX Filtration Holding. It trades about 0.27 of its potential returns per unit of risk. NX Filtration Holding is currently generating about -0.14 per unit of risk. If you would invest  1,425  in Tetragon Financial Group on October 24, 2024 and sell it today you would earn a total of  220.00  from holding Tetragon Financial Group or generate 15.44% return on investment over 90 days.

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

Tetragon Financial Group  vs.  NX Filtration Holding

Tetragon Financial

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tetragon Financial Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Tetragon Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

NX Filtration Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NX Filtration Holding 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tetragon Financial and NX Filtration

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

The idea behind Tetragon Financial Group and NX Filtration Holding 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.