Correlation Between Cardio Diagnostics and Nektar Therapeutics

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

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

Diversification Opportunities for Cardio Diagnostics and Nektar Therapeutics

-0.83

Correlation Coefficient

Cardio Diagnostics  Nektar Therapeutics

Pay attention - limited upside

The 3 months correlation between Cardio and Nektar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Cardio Diagnostics Holdings and Nektar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nektar Therapeutics and Cardio Diagnostics 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 Cardio Diagnostics Holdings are associated (or correlated) with Nektar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nektar Therapeutics has no effect on the direction of Cardio Diagnostics i.e., Cardio Diagnostics and Nektar Therapeutics go up and down completely randomly.

Pair Corralation between Cardio Diagnostics and Nektar Therapeutics

Assuming the 90 days horizon Cardio Diagnostics is expected to generate 24.57 times less return on investment than Nektar Therapeutics. In addition to that, Cardio Diagnostics is 1.99 times more volatile than Nektar Therapeutics. It trades about 0.01 of its total potential returns per unit of risk. Nektar Therapeutics is currently generating about 0.29 per unit of volatility. If you would invest  90.00  in Nektar Therapeutics on February 1, 2024 and sell it today you would earn a total of  56.00  from holding Nektar Therapeutics or generate 62.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	86.36%
Values	Daily Returns

Cardio Diagnostics Holdings  vs.  Nektar Therapeutics

Cardio Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardio Diagnostics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nektar Therapeutics

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nektar Therapeutics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Nektar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardio Diagnostics and Nektar Therapeutics

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

The idea behind Cardio Diagnostics Holdings and Nektar 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.