Correlation Between Nexalin Technology and Anika Therapeutics

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

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

Diversification Opportunities for Nexalin Technology and Anika Therapeutics

-0.92

Correlation Coefficient

Nexalin Technology  Anika Therapeutics

Pay attention - limited upside

The 3 months correlation between Nexalin and Anika is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nexalin Technology and Anika Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anika Therapeutics and Nexalin Technology 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 Nexalin Technology are associated (or correlated) with Anika Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anika Therapeutics has no effect on the direction of Nexalin Technology i.e., Nexalin Technology and Anika Therapeutics go up and down completely randomly.

Pair Corralation between Nexalin Technology and Anika Therapeutics

Considering the 90-day investment horizon Nexalin Technology is expected to generate 2.96 times more return on investment than Anika Therapeutics. However, Nexalin Technology is 2.96 times more volatile than Anika Therapeutics. It trades about 0.25 of its potential returns per unit of risk. Anika Therapeutics is currently generating about -0.11 per unit of risk. If you would invest  90.00  in Nexalin Technology on August 31, 2024 and sell it today you would earn a total of  337.00  from holding Nexalin Technology or generate 374.44% return on investment over 90 days.

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

Nexalin Technology  vs.  Anika Therapeutics

Nexalin Technology

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Nexalin Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Anika Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nexalin Technology and Anika Therapeutics

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

The idea behind Nexalin Technology and Anika Therapeutics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.