Correlation Between CVS Health and Nyxoah

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

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

Diversification Opportunities for CVS Health and Nyxoah

0.76

Correlation Coefficient

CVS Health  Nyxoah

Poor diversification

The 3 months correlation between CVS and Nyxoah is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health Corp and Nyxoah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyxoah and CVS Health 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 CVS Health Corp are associated (or correlated) with Nyxoah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nyxoah has no effect on the direction of CVS Health i.e., CVS Health and Nyxoah go up and down completely randomly.

Pair Corralation between CVS Health and Nyxoah

Considering the 90-day investment horizon CVS Health is expected to generate 2.89 times less return on investment than Nyxoah. But when comparing it to its historical volatility, CVS Health Corp is 1.15 times less risky than Nyxoah. It trades about 0.08 of its potential returns per unit of risk. Nyxoah is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  861.00  in Nyxoah on July 21, 2024 and sell it today you would earn a total of  92.00  from holding Nyxoah or generate 10.69% return on investment over 90 days.

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

CVS Health Corp  vs.  Nyxoah

CVS Health Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVS Health Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CVS Health is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Nyxoah

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nyxoah are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Nyxoah may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with CVS Health and Nyxoah

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

The idea behind CVS Health Corp and Nyxoah 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.