Correlation Between AlzChem Group and Nasdaq

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

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

Diversification Opportunities for AlzChem Group and Nasdaq

0.66

Correlation Coefficient

AlzChem Group  Nasdaq

Poor diversification

The 3 months correlation between AlzChem and Nasdaq is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AlzChem Group AG and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and AlzChem Group 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 AlzChem Group AG are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of AlzChem Group i.e., AlzChem Group and Nasdaq go up and down completely randomly.

Pair Corralation between AlzChem Group and Nasdaq

Assuming the 90 days trading horizon AlzChem Group AG is expected to generate 2.65 times more return on investment than Nasdaq. However, AlzChem Group is 2.65 times more volatile than Nasdaq Inc. It trades about 0.2 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.21 per unit of risk. If you would invest  4,070  in AlzChem Group AG on September 17, 2024 and sell it today you would earn a total of  1,890  from holding AlzChem Group AG or generate 46.44% return on investment over 90 days.

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

AlzChem Group AG  vs.  Nasdaq Inc

AlzChem Group AG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AlzChem Group AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AlzChem Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nasdaq reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AlzChem Group and Nasdaq

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

The idea behind AlzChem Group AG and Nasdaq Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.