Correlation Between Neptune Wellness and Durect

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

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

Diversification Opportunities for Neptune Wellness and Durect

0.11

Correlation Coefficient

Neptune Wellness  Durect

Average diversification

The 3 months correlation between Neptune and Durect is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Neptune Wellness Solutions and Durect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durect and Neptune Wellness 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 Neptune Wellness Solutions are associated (or correlated) with Durect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durect has no effect on the direction of Neptune Wellness i.e., Neptune Wellness and Durect go up and down completely randomly.

Pair Corralation between Neptune Wellness and Durect

If you would invest  84.00  in Durect on February 10, 2024 and sell it today you would earn a total of  29.00  from holding Durect or generate 34.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Neptune Wellness Solutions  vs.  Durect

Neptune Wellness Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neptune Wellness Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Neptune Wellness is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Durect

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Durect are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Durect showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neptune Wellness and Durect

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

The idea behind Neptune Wellness Solutions and Durect 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.