Correlation Between 00108WAF7 and NRX Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and NRX Pharmaceuticals 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 00108WAF7 and NRX Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and NRX Pharmaceuticals, you can compare the effects of market volatilities on 00108WAF7 and NRX Pharmaceuticals 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 00108WAF7 with a short position of NRX Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and NRX Pharmaceuticals.

Diversification Opportunities for 00108WAF7 and NRX Pharmaceuticals

0.16

Correlation Coefficient

00108WAF7  NRX Pharmaceuticals

Average diversification

The 3 months correlation between 00108WAF7 and NRX is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and NRX Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRX Pharmaceuticals and 00108WAF7 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 AEP TEX INC are associated (or correlated) with NRX Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRX Pharmaceuticals has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and NRX Pharmaceuticals go up and down completely randomly.

Pair Corralation between 00108WAF7 and NRX Pharmaceuticals

Assuming the 90 days trading horizon 00108WAF7 is expected to generate 38.32 times less return on investment than NRX Pharmaceuticals. But when comparing it to its historical volatility, AEP TEX INC is 3.37 times less risky than NRX Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. NRX Pharmaceuticals is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest  121.00  in NRX Pharmaceuticals on October 9, 2024 and sell it today you would earn a total of  230.00  from holding NRX Pharmaceuticals or generate 190.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	63.16%
Values	Daily Returns

AEP TEX INC  vs.  NRX Pharmaceuticals

AEP TEX INC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AEP TEX INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 00108WAF7 sustained solid returns over the last few months and may actually be approaching a breakup point.

NRX Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NRX Pharmaceuticals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NRX Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 00108WAF7 and NRX Pharmaceuticals

The main advantage of trading using opposite 00108WAF7 and NRX Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, NRX Pharmaceuticals 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 NRX Pharmaceuticals will offset losses from the drop in NRX Pharmaceuticals' long position.

The idea behind AEP TEX INC and NRX Pharmaceuticals 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..