Correlation Between Nuvation Bio and Aquestive Therapeutics

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

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

Diversification Opportunities for Nuvation Bio and Aquestive Therapeutics

-0.41

Correlation Coefficient

Nuvation Bio  Aquestive Therapeutics

Very good diversification

The 3 months correlation between Nuvation and Aquestive is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Nuvation Bio 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 Nuvation Bio are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Nuvation Bio and Aquestive Therapeutics

Given the investment horizon of 90 days Nuvation Bio is expected to generate 6.01 times less return on investment than Aquestive Therapeutics. In addition to that, Nuvation Bio is 1.13 times more volatile than Aquestive Therapeutics. It trades about 0.01 of its total potential returns per unit of risk. Aquestive Therapeutics is currently generating about 0.09 per unit of volatility. If you would invest  419.00  in Aquestive Therapeutics on September 3, 2024 and sell it today you would earn a total of  90.00  from holding Aquestive Therapeutics or generate 21.48% return on investment over 90 days.

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

Nuvation Bio  vs.  Aquestive Therapeutics

Nuvation Bio

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvation Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nuvation Bio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aquestive Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aquestive Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Aquestive Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuvation Bio and Aquestive Therapeutics

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

The idea behind Nuvation Bio and Aquestive Therapeutics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.