Correlation Between Grindrod and Nuvation Bio

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

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

Diversification Opportunities for Grindrod and Nuvation Bio

0.0

Correlation Coefficient

Grindrod  Nuvation Bio

Pay attention - limited upside

The 3 months correlation between Grindrod and Nuvation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grindrod Ltd ADR and Nuvation Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvation Bio and Grindrod 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 Grindrod Ltd ADR 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 Grindrod i.e., Grindrod and Nuvation Bio go up and down completely randomly.

Pair Corralation between Grindrod and Nuvation Bio

Assuming the 90 days horizon Grindrod is expected to generate 20.14 times less return on investment than Nuvation Bio. But when comparing it to its historical volatility, Grindrod Ltd ADR is 56.71 times less risky than Nuvation Bio. It trades about 0.09 of its potential returns per unit of risk. Nuvation Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Nuvation Bio on December 1, 2024 and sell it today you would earn a total of  37.00  from holding Nuvation Bio or generate 23.13% return on investment over 90 days.

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

Grindrod Ltd ADR  vs.  Nuvation Bio

Grindrod ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grindrod Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Grindrod is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Nuvation Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuvation Bio 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 basic 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.

Pair Trading with Grindrod and Nuvation Bio

The main advantage of trading using opposite Grindrod and Nuvation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grindrod 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 Grindrod Ltd ADR 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.