Correlation Between Nuvation Bio and ABVC Biopharma

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

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

Diversification Opportunities for Nuvation Bio and ABVC Biopharma

0.2

Correlation Coefficient

Nuvation Bio  ABVC Biopharma

Modest diversification

The 3 months correlation between Nuvation and ABVC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and ABVC Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABVC Biopharma and Nuvation Bio 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 Nuvation Bio are associated (or correlated) with ABVC Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABVC Biopharma has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and ABVC Biopharma go up and down completely randomly.

Pair Corralation between Nuvation Bio and ABVC Biopharma

Given the investment horizon of 90 days Nuvation Bio is expected to generate 0.8 times more return on investment than ABVC Biopharma. However, Nuvation Bio is 1.26 times less risky than ABVC Biopharma. It trades about 0.01 of its potential returns per unit of risk. ABVC Biopharma is currently generating about -0.04 per unit of risk. If you would invest  298.00  in Nuvation Bio on August 31, 2024 and sell it today you would lose (8.00) from holding Nuvation Bio or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Nuvation Bio  vs.  ABVC Biopharma

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.

ABVC Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABVC Biopharma 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 Nuvation Bio and ABVC Biopharma

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

The idea behind Nuvation Bio and ABVC Biopharma 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.