Correlation Between Terns Pharmaceuticals and Nuvation Bio
Can any of the company-specific risk be diversified away by investing in both Terns Pharmaceuticals 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 Terns Pharmaceuticals and Nuvation Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terns Pharmaceuticals and Nuvation Bio, you can compare the effects of market volatilities on Terns Pharmaceuticals 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 Terns Pharmaceuticals with a short position of Nuvation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and Nuvation Bio.
Diversification Opportunities for Terns Pharmaceuticals and Nuvation Bio
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Terns and Nuvation is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Terns Pharmaceuticals 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 Terns Pharmaceuticals 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 Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Nuvation Bio go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and Nuvation Bio
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to generate 4.43 times less return on investment than Nuvation Bio. In addition to that, Terns Pharmaceuticals is 1.12 times more volatile than Nuvation Bio. It trades about 0.01 of its total potential returns per unit of risk. Nuvation Bio is currently generating about 0.04 per unit of volatility. If you would invest 199.00 in Nuvation Bio on August 28, 2024 and sell it today you would earn a total of 90.00 from holding Nuvation Bio or generate 45.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. Nuvation Bio
Performance |
| Timeline |
| Terns Pharmaceuticals |
| Nuvation Bio |
Terns Pharmaceuticals and Nuvation Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and Nuvation Bio
The main advantage of trading using opposite Terns Pharmaceuticals and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals 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.| Terns Pharmaceuticals vs. Capricor Therapeutics | Terns Pharmaceuticals vs. Soleno Therapeutics | Terns Pharmaceuticals vs. Bio Path Holdings | Terns Pharmaceuticals vs. Moleculin Biotech |
| Nuvation Bio vs. Eliem Therapeutics | Nuvation Bio vs. Scpharmaceuticals | Nuvation Bio vs. Milestone Pharmaceuticals | Nuvation Bio vs. Seres Therapeutics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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