Correlation Between Logility Supply and Nuvalent

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

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

Diversification Opportunities for Logility Supply and Nuvalent

-0.5

Correlation Coefficient

Logility Supply  Nuvalent

Very good diversification

The 3 months correlation between Logility and Nuvalent is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Logility Supply Chain and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Logility Supply 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 Logility Supply Chain 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 Logility Supply i.e., Logility Supply and Nuvalent go up and down completely randomly.

Pair Corralation between Logility Supply and Nuvalent

Given the investment horizon of 90 days Logility Supply Chain is expected to generate 1.34 times more return on investment than Nuvalent. However, Logility Supply is 1.34 times more volatile than Nuvalent. It trades about 0.08 of its potential returns per unit of risk. Nuvalent is currently generating about -0.41 per unit of risk. If you would invest  1,065  in Logility Supply Chain on October 3, 2024 and sell it today you would earn a total of  43.00  from holding Logility Supply Chain or generate 4.04% return on investment over 90 days.

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

Logility Supply Chain  vs.  Nuvalent

Logility Supply Chain

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Logility Supply may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Logility Supply and Nuvalent

The main advantage of trading using opposite Logility Supply and Nuvalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logility Supply 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 Logility Supply Chain 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.