Correlation Between Applied Molecular and NRx Pharmaceuticals

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

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

Diversification Opportunities for Applied Molecular and NRx Pharmaceuticals

-0.15

Correlation Coefficient

Applied Molecular  NRx Pharmaceuticals

Good diversification

The 3 months correlation between Applied and NRx is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Applied Molecular Transport and NRx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRx Pharmaceuticals and Applied Molecular 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 Applied Molecular Transport 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 Applied Molecular i.e., Applied Molecular and NRx Pharmaceuticals go up and down completely randomly.

Pair Corralation between Applied Molecular and NRx Pharmaceuticals

If you would invest  8.00  in NRx Pharmaceuticals on September 2, 2024 and sell it today you would lose (2.90) from holding NRx Pharmaceuticals or give up 36.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.89%
Values	Daily Returns

Applied Molecular Transport  vs.  NRx Pharmaceuticals

Applied Molecular

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Molecular Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Applied Molecular is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

NRx Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NRx Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, NRx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Molecular and NRx Pharmaceuticals

The main advantage of trading using opposite Applied Molecular and NRx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Molecular 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 Applied Molecular Transport 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.