Correlation Between Nextage Therapeutics and Bazan Oil
Can any of the company-specific risk be diversified away by investing in both Nextage Therapeutics and Bazan Oil 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 Nextage Therapeutics and Bazan Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextage Therapeutics and Bazan Oil Refineries, you can compare the effects of market volatilities on Nextage Therapeutics and Bazan Oil 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 Nextage Therapeutics with a short position of Bazan Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextage Therapeutics and Bazan Oil.
Diversification Opportunities for Nextage Therapeutics and Bazan Oil
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nextage and Bazan is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nextage Therapeutics and Bazan Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bazan Oil Refineries and Nextage Therapeutics 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 Nextage Therapeutics are associated (or correlated) with Bazan Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bazan Oil Refineries has no effect on the direction of Nextage Therapeutics i.e., Nextage Therapeutics and Bazan Oil go up and down completely randomly.
Pair Corralation between Nextage Therapeutics and Bazan Oil
Assuming the 90 days trading horizon Nextage Therapeutics is expected to generate 3.49 times more return on investment than Bazan Oil. However, Nextage Therapeutics is 3.49 times more volatile than Bazan Oil Refineries. It trades about 0.15 of its potential returns per unit of risk. Bazan Oil Refineries is currently generating about -0.15 per unit of risk. If you would invest 4,070 in Nextage Therapeutics on February 12, 2024 and sell it today you would earn a total of 2,930 from holding Nextage Therapeutics or generate 71.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 97.96% |
Values | Daily Returns |
Nextage Therapeutics vs. Bazan Oil Refineries
Performance |
Timeline |
Nextage Therapeutics |
Bazan Oil Refineries |
Nextage Therapeutics and Bazan Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nextage Therapeutics and Bazan Oil
The main advantage of trading using opposite Nextage Therapeutics and Bazan Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextage Therapeutics position performs unexpectedly, Bazan Oil 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 Bazan Oil will offset losses from the drop in Bazan Oil's long position.The idea behind Nextage Therapeutics and Bazan Oil Refineries 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.Bazan Oil vs. Fattal 1998 Holdings | Bazan Oil vs. El Al Israel | Bazan Oil vs. Bank Leumi Le Israel | Bazan Oil vs. Teva Pharmaceutical Industries |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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