Correlation Between Nexalin Technology and DexCom

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

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

Diversification Opportunities for Nexalin Technology and DexCom

0.63

Correlation Coefficient

Nexalin Technology  DexCom

Poor diversification

The 3 months correlation between Nexalin and DexCom is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nexalin Technology and DexCom Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DexCom Inc 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 DexCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DexCom Inc has no effect on the direction of Nexalin Technology i.e., Nexalin Technology and DexCom go up and down completely randomly.

Pair Corralation between Nexalin Technology and DexCom

Considering the 90-day investment horizon Nexalin Technology is expected to under-perform the DexCom. In addition to that, Nexalin Technology is 3.69 times more volatile than DexCom Inc. It trades about -0.13 of its total potential returns per unit of risk. DexCom Inc is currently generating about -0.05 per unit of volatility. If you would invest  13,334  in DexCom Inc on February 4, 2024 and sell it today you would lose (497.00) from holding DexCom Inc or give up 3.73% of portfolio value over 90 days.

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

Nexalin Technology  vs.  DexCom Inc

Nexalin Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Nexalin Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

DexCom Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DexCom Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, DexCom may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Nexalin Technology and DexCom

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

The idea behind Nexalin Technology and DexCom Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.