Correlation Between Catalyst Biosciences and NextCure

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

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

Diversification Opportunities for Catalyst Biosciences and NextCure

-0.49

Correlation Coefficient

Catalyst Biosciences  NextCure

Very good diversification

The 3 months correlation between Catalyst and NextCure is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Biosciences and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Catalyst Biosciences 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 Catalyst Biosciences are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Catalyst Biosciences i.e., Catalyst Biosciences and NextCure go up and down completely randomly.

Pair Corralation between Catalyst Biosciences and NextCure

If you would invest  41.00  in Catalyst Biosciences on August 29, 2024 and sell it today you would earn a total of  0.00  from holding Catalyst Biosciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.55%
Values	Daily Returns

Catalyst Biosciences  vs.  NextCure

Catalyst Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Catalyst Biosciences and NextCure

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

The idea behind Catalyst Biosciences and NextCure 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.