Correlation Between Erasca and Nuvation Bio

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

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

Diversification Opportunities for Erasca and Nuvation Bio

0.54

Correlation Coefficient

Erasca  Nuvation Bio

Very weak diversification

The 3 months correlation between Erasca and Nuvation is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Erasca 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 Erasca Inc 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 Erasca i.e., Erasca and Nuvation Bio go up and down completely randomly.

Pair Corralation between Erasca and Nuvation Bio

Given the investment horizon of 90 days Erasca Inc is expected to under-perform the Nuvation Bio. But the stock apears to be less risky and, when comparing its historical volatility, Erasca Inc is 1.05 times less risky than Nuvation Bio. The stock trades about 0.0 of its potential returns per unit of risk. The Nuvation Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  202.00  in Nuvation Bio on September 24, 2024 and sell it today you would earn a total of  66.00  from holding Nuvation Bio or generate 32.67% return on investment over 90 days.

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

Erasca Inc  vs.  Nuvation Bio

Erasca Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Erasca Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Erasca is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nuvation Bio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvation Bio are ranked lower than 2 (%) 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 January 2025.

Pair Trading with Erasca and Nuvation Bio

The main advantage of trading using opposite Erasca and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca 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.

The idea behind Erasca Inc and Nuvation Bio 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.