Correlation Between Inventiva and Nuvation Bio

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

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

Diversification Opportunities for Inventiva and Nuvation Bio

0.05

Correlation Coefficient

Inventiva  Nuvation Bio

Significant diversification

The 3 months correlation between Inventiva and Nuvation is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Inventiva Sa and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Inventiva 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 Inventiva Sa 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 Inventiva i.e., Inventiva and Nuvation Bio go up and down completely randomly.

Pair Corralation between Inventiva and Nuvation Bio

Considering the 90-day investment horizon Inventiva Sa is expected to generate 1.39 times more return on investment than Nuvation Bio. However, Inventiva is 1.39 times more volatile than Nuvation Bio. It trades about 0.09 of its potential returns per unit of risk. Nuvation Bio is currently generating about 0.04 per unit of risk. If you would invest  216.00  in Inventiva Sa on August 13, 2024 and sell it today you would earn a total of  61.00  from holding Inventiva Sa or generate 28.24% return on investment over 90 days.

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

Inventiva Sa  vs.  Nuvation Bio

Inventiva Sa

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inventiva Sa are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Inventiva sustained solid returns over the last few months and may actually be approaching a breakup point.

Nuvation Bio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvation Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nuvation Bio may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Inventiva and Nuvation Bio

The main advantage of trading using opposite Inventiva and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inventiva 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 Inventiva Sa 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.