Correlation Between Gracell Biotechnologies and Nuvation Bio

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

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

Diversification Opportunities for Gracell Biotechnologies and Nuvation Bio

-0.41

Correlation Coefficient

Gracell Biotechnologies  Nuvation Bio

Very good diversification

The 3 months correlation between Gracell and Nuvation is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gracell Biotechnologies and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Gracell Biotechnologies 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 Gracell Biotechnologies are associated (or correlated) with Nuvation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvation Bio has no effect on the direction of Gracell Biotechnologies i.e., Gracell Biotechnologies and Nuvation Bio go up and down completely randomly.

Pair Corralation between Gracell Biotechnologies and Nuvation Bio

Given the investment horizon of 90 days Gracell Biotechnologies is expected to generate 1.4 times more return on investment than Nuvation Bio. However, Gracell Biotechnologies is 1.4 times more volatile than Nuvation Bio. It trades about 0.1 of its potential returns per unit of risk. Nuvation Bio is currently generating about 0.04 per unit of risk. If you would invest  217.00  in Gracell Biotechnologies on August 31, 2024 and sell it today you would earn a total of  185.00  from holding Gracell Biotechnologies or generate 85.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.45%
Values	Daily Returns

Gracell Biotechnologies  vs.  Nuvation Bio

Gracell Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuvation Bio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvation Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nuvation Bio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gracell Biotechnologies and Nuvation Bio

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

The idea behind Gracell Biotechnologies and Nuvation Bio 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.