Correlation Between United Fire and Nyxoah

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

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

Diversification Opportunities for United Fire and Nyxoah

-0.88

Correlation Coefficient

United Fire  Nyxoah

Pay attention - limited upside

The 3 months correlation between United and Nyxoah is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group and Nyxoah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyxoah and United Fire 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 United Fire Group are associated (or correlated) with Nyxoah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyxoah has no effect on the direction of United Fire i.e., United Fire and Nyxoah go up and down completely randomly.

Pair Corralation between United Fire and Nyxoah

Given the investment horizon of 90 days United Fire Group is expected to under-perform the Nyxoah. But the stock apears to be less risky and, when comparing its historical volatility, United Fire Group is 2.55 times less risky than Nyxoah. The stock trades about -0.47 of its potential returns per unit of risk. The Nyxoah is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  754.00  in Nyxoah on October 10, 2024 and sell it today you would earn a total of  231.00  from holding Nyxoah or generate 30.64% return on investment over 90 days.

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

United Fire Group  vs.  Nyxoah

United Fire Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nyxoah

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nyxoah are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Nyxoah is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with United Fire and Nyxoah

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

The idea behind United Fire Group and Nyxoah 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.