Correlation Between Corsair Gaming and Nuvalent

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

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

Diversification Opportunities for Corsair Gaming and Nuvalent

-0.07

Correlation Coefficient

Corsair Gaming  Nuvalent

Good diversification

The 3 months correlation between Corsair and Nuvalent is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Corsair Gaming and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Corsair Gaming 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 Corsair Gaming are associated (or correlated) with Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Corsair Gaming i.e., Corsair Gaming and Nuvalent go up and down completely randomly.

Pair Corralation between Corsair Gaming and Nuvalent

Given the investment horizon of 90 days Corsair Gaming is expected to under-perform the Nuvalent. But the stock apears to be less risky and, when comparing its historical volatility, Corsair Gaming is 1.36 times less risky than Nuvalent. The stock trades about -0.05 of its potential returns per unit of risk. The Nuvalent is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,852  in Nuvalent on September 25, 2024 and sell it today you would earn a total of  5,533  from holding Nuvalent or generate 194.0% return on investment over 90 days.

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

Corsair Gaming  vs.  Nuvalent

Corsair Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Corsair Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Corsair Gaming is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Corsair Gaming and Nuvalent

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

The idea behind Corsair Gaming and Nuvalent 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.