Correlation Between Monopar Therapeutics and NextCure

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

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

Diversification Opportunities for Monopar Therapeutics and NextCure

-0.6

Correlation Coefficient

Monopar Therapeutics  NextCure

Excellent diversification

The 3 months correlation between Monopar and NextCure is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Monopar Therapeutics and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Monopar 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 Monopar Therapeutics 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 Monopar Therapeutics i.e., Monopar Therapeutics and NextCure go up and down completely randomly.

Pair Corralation between Monopar Therapeutics and NextCure

Given the investment horizon of 90 days Monopar Therapeutics is expected to generate 21.35 times more return on investment than NextCure. However, Monopar Therapeutics is 21.35 times more volatile than NextCure. It trades about 0.14 of its potential returns per unit of risk. NextCure is currently generating about -0.09 per unit of risk. If you would invest  243.00  in Monopar Therapeutics on September 5, 2024 and sell it today you would earn a total of  2,074  from holding Monopar Therapeutics or generate 853.5% return on investment over 90 days.

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

Monopar Therapeutics  vs.  NextCure

Monopar Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Monopar Therapeutics reported 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 conflicting 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 Monopar Therapeutics and NextCure

The main advantage of trading using opposite Monopar Therapeutics and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monopar Therapeutics 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 Monopar Therapeutics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.