Correlation Between Nuvation Bio and Assembly Biosciences

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

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

Diversification Opportunities for Nuvation Bio and Assembly Biosciences

-0.05

Correlation Coefficient

Nuvation Bio  Assembly Biosciences

Good diversification

The 3 months correlation between Nuvation and Assembly is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Assembly Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assembly Biosciences 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 Assembly Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assembly Biosciences has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Assembly Biosciences go up and down completely randomly.

Pair Corralation between Nuvation Bio and Assembly Biosciences

Given the investment horizon of 90 days Nuvation Bio is expected to under-perform the Assembly Biosciences. In addition to that, Nuvation Bio is 1.05 times more volatile than Assembly Biosciences. It trades about -0.01 of its total potential returns per unit of risk. Assembly Biosciences is currently generating about 0.11 per unit of volatility. If you would invest  1,570  in Assembly Biosciences on June 24, 2024 and sell it today you would earn a total of  373.00  from holding Assembly Biosciences or generate 23.76% return on investment over 90 days.

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

Nuvation Bio  vs.  Assembly Biosciences

Nuvation Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvation Bio has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Assembly Biosciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Assembly Biosciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Assembly Biosciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuvation Bio and Assembly Biosciences

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

The idea behind Nuvation Bio and Assembly Biosciences 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.