Correlation Between Nasdaq and Neolife SA

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

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

Diversification Opportunities for Nasdaq and Neolife SA

-0.01

Correlation Coefficient

Nasdaq  Neolife SA

Good diversification

The 3 months correlation between Nasdaq and Neolife is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Neolife SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neolife SA and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Neolife SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neolife SA has no effect on the direction of Nasdaq i.e., Nasdaq and Neolife SA go up and down completely randomly.

Pair Corralation between Nasdaq and Neolife SA

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Neolife SA. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.89 times less risky than Neolife SA. The stock trades about -0.13 of its potential returns per unit of risk. The Neolife SA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5.62  in Neolife SA on September 26, 2024 and sell it today you would earn a total of  0.67  from holding Neolife SA or generate 11.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  Neolife SA

Nasdaq Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Neolife SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neolife SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Neolife SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nasdaq and Neolife SA

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

The idea behind Nasdaq Inc and Neolife SA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.