Correlation Between NextCure and Acasti Pharma

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

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

Diversification Opportunities for NextCure and Acasti Pharma

-0.81

Correlation Coefficient

NextCure  Acasti Pharma

Pay attention - limited upside

The 3 months correlation between NextCure and Acasti is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Acasti Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acasti Pharma and NextCure 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 NextCure are associated (or correlated) with Acasti Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acasti Pharma has no effect on the direction of NextCure i.e., NextCure and Acasti Pharma go up and down completely randomly.

Pair Corralation between NextCure and Acasti Pharma

Given the investment horizon of 90 days NextCure is expected to under-perform the Acasti Pharma. But the stock apears to be less risky and, when comparing its historical volatility, NextCure is 1.21 times less risky than Acasti Pharma. The stock trades about -0.21 of its potential returns per unit of risk. The Acasti Pharma is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  322.00  in Acasti Pharma on September 19, 2024 and sell it today you would earn a total of  15.00  from holding Acasti Pharma or generate 4.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	14.29%
Values	Daily Returns

NextCure  vs.  Acasti Pharma

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 weak 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.

Acasti Pharma

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Acasti Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Acasti Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextCure and Acasti Pharma

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

The idea behind NextCure and Acasti Pharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.