Correlation Between NextCure and Unicycive Therapeutics

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

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

Diversification Opportunities for NextCure and Unicycive Therapeutics

-0.57

Correlation Coefficient

NextCure  Unicycive Therapeutics

Excellent diversification

The 3 months correlation between NextCure and Unicycive is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Unicycive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicycive Therapeutics and NextCure 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 NextCure are associated (or correlated) with Unicycive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicycive Therapeutics has no effect on the direction of NextCure i.e., NextCure and Unicycive Therapeutics go up and down completely randomly.

Pair Corralation between NextCure and Unicycive Therapeutics

Given the investment horizon of 90 days NextCure is expected to under-perform the Unicycive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, NextCure is 2.36 times less risky than Unicycive Therapeutics. The stock trades about -0.1 of its potential returns per unit of risk. The Unicycive Therapeutics is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Unicycive Therapeutics on August 13, 2024 and sell it today you would earn a total of  35.00  from holding Unicycive Therapeutics or generate 145.83% return on investment over 90 days.

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

NextCure  vs.  Unicycive Therapeutics

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.

Unicycive Therapeutics

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Unicycive Therapeutics are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Unicycive Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextCure and Unicycive Therapeutics

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

The idea behind NextCure and Unicycive 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.