Correlation Between Nuvation Bio and INC Research

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

By analyzing existing cross correlation between Nuvation Bio and INC Research Holdings, you can compare the effects of market volatilities on Nuvation Bio and INC Research 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 INC Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvation Bio and INC Research.

Diversification Opportunities for Nuvation Bio and INC Research

0.01

Correlation Coefficient

Nuvation Bio  INC Research

Significant diversification

The 3 months correlation between Nuvation and INC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and INC Research Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INC Research Holdings 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 INC Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INC Research Holdings has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and INC Research go up and down completely randomly.

Pair Corralation between Nuvation Bio and INC Research

Given the investment horizon of 90 days Nuvation Bio is expected to generate 1.05 times more return on investment than INC Research. However, Nuvation Bio is 1.05 times more volatile than INC Research Holdings. It trades about 0.02 of its potential returns per unit of risk. INC Research Holdings is currently generating about -0.13 per unit of risk. If you would invest  301.00  in Nuvation Bio on September 4, 2024 and sell it today you would lose (3.00) from holding Nuvation Bio or give up 1.0% of portfolio value over 90 days.

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

Nuvation Bio  vs.  INC Research Holdings

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.

INC Research Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INC Research Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nuvation Bio and INC Research

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

The idea behind Nuvation Bio and INC Research Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.