Correlation Between Nuvation Bio and Acumen Pharmaceuticals

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

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

Diversification Opportunities for Nuvation Bio and Acumen Pharmaceuticals

0.08

Correlation Coefficient

Nuvation Bio  Acumen Pharmaceuticals

Significant diversification

The 3 months correlation between Nuvation and Acumen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Acumen Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acumen Pharmaceuticals 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 Acumen Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acumen Pharmaceuticals has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Acumen Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nuvation Bio and Acumen Pharmaceuticals

Given the investment horizon of 90 days Nuvation Bio is expected to generate 1.41 times less return on investment than Acumen Pharmaceuticals. In addition to that, Nuvation Bio is 1.13 times more volatile than Acumen Pharmaceuticals. It trades about 0.25 of its total potential returns per unit of risk. Acumen Pharmaceuticals is currently generating about 0.39 per unit of volatility. If you would invest  235.00  in Acumen Pharmaceuticals on August 13, 2024 and sell it today you would earn a total of  92.00  from holding Acumen Pharmaceuticals or generate 39.15% return on investment over 90 days.

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

Nuvation Bio  vs.  Acumen Pharmaceuticals

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.

Acumen Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acumen Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Acumen Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuvation Bio and Acumen Pharmaceuticals

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

The idea behind Nuvation Bio and Acumen Pharmaceuticals 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.