Correlation Between Biomea Fusion and Nuvectis Pharma

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

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

Diversification Opportunities for Biomea Fusion and Nuvectis Pharma

-0.68

Correlation Coefficient

Biomea Fusion  Nuvectis Pharma

Excellent diversification

The 3 months correlation between Biomea and Nuvectis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Biomea Fusion and Nuvectis Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvectis Pharma and Biomea Fusion 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 Biomea Fusion are associated (or correlated) with Nuvectis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvectis Pharma has no effect on the direction of Biomea Fusion i.e., Biomea Fusion and Nuvectis Pharma go up and down completely randomly.

Pair Corralation between Biomea Fusion and Nuvectis Pharma

Given the investment horizon of 90 days Biomea Fusion is expected to under-perform the Nuvectis Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Biomea Fusion is 1.26 times less risky than Nuvectis Pharma. The stock trades about -0.16 of its potential returns per unit of risk. The Nuvectis Pharma is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  514.00  in Nuvectis Pharma on December 30, 2024 and sell it today you would earn a total of  532.00  from holding Nuvectis Pharma or generate 103.5% return on investment over 90 days.

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

Biomea Fusion  vs.  Nuvectis Pharma

Biomea Fusion

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biomea Fusion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nuvectis Pharma

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvectis Pharma are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Nuvectis Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomea Fusion and Nuvectis Pharma

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

The idea behind Biomea Fusion and Nuvectis Pharma 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.