Correlation Between NeuroMetrix and Nuwellis

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

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

Diversification Opportunities for NeuroMetrix and Nuwellis

-0.1

Correlation Coefficient

NeuroMetrix  Nuwellis

Good diversification

The 3 months correlation between NeuroMetrix and Nuwellis is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding NeuroMetrix and Nuwellis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuwellis and NeuroMetrix 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 NeuroMetrix are associated (or correlated) with Nuwellis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuwellis has no effect on the direction of NeuroMetrix i.e., NeuroMetrix and Nuwellis go up and down completely randomly.

Pair Corralation between NeuroMetrix and Nuwellis

Given the investment horizon of 90 days NeuroMetrix is expected to generate 0.5 times more return on investment than Nuwellis. However, NeuroMetrix is 1.99 times less risky than Nuwellis. It trades about -0.16 of its potential returns per unit of risk. Nuwellis is currently generating about -0.09 per unit of risk. If you would invest  431.00  in NeuroMetrix on October 1, 2024 and sell it today you would lose (37.00) from holding NeuroMetrix or give up 8.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

NeuroMetrix  vs.  Nuwellis

NeuroMetrix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NeuroMetrix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NeuroMetrix is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Nuwellis

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuwellis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nuwellis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NeuroMetrix and Nuwellis

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

The idea behind NeuroMetrix and Nuwellis 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.