Correlation Between Eastern and Nyxoah

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

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

Diversification Opportunities for Eastern and Nyxoah

0.52

Correlation Coefficient

Eastern  Nyxoah

Very weak diversification

The 3 months correlation between Eastern and Nyxoah is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Nyxoah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nyxoah and Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Nyxoah go up and down completely randomly.

Pair Corralation between Eastern and Nyxoah

Considering the 90-day investment horizon Eastern Co is expected to under-perform the Nyxoah. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 1.15 times less risky than Nyxoah. The stock trades about -0.03 of its potential returns per unit of risk. The Nyxoah is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  830.00  in Nyxoah on August 26, 2024 and sell it today you would lose (30.00) from holding Nyxoah or give up 3.61% of portfolio value over 90 days.

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

Eastern Co  vs.  Nyxoah

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Nyxoah

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nyxoah has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nyxoah is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eastern and Nyxoah

The main advantage of trading using opposite Eastern and Nyxoah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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 Eastern Co 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.

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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.