Correlation Between Acasti Pharma and NextCure

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

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

Diversification Opportunities for Acasti Pharma and NextCure

-0.81

Correlation Coefficient

Acasti Pharma  NextCure

Pay attention - limited upside

The 3 months correlation between Acasti and NextCure is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Acasti Pharma and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Acasti Pharma 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 Acasti Pharma are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Acasti Pharma i.e., Acasti Pharma and NextCure go up and down completely randomly.

Pair Corralation between Acasti Pharma and NextCure

Given the investment horizon of 90 days Acasti Pharma is expected to generate 1.3 times more return on investment than NextCure. However, Acasti Pharma is 1.3 times more volatile than NextCure. It trades about 0.16 of its potential returns per unit of risk. NextCure is currently generating about -0.17 per unit of risk. If you would invest  278.00  in Acasti Pharma on September 19, 2024 and sell it today you would earn a total of  59.00  from holding Acasti Pharma or generate 21.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	44.44%
Values	Daily Returns

Acasti Pharma  vs.  NextCure

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Acasti Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

NextCure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextCure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Acasti Pharma and NextCure

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

The idea behind Acasti Pharma and NextCure 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.