Correlation Between Nuvation Bio and Inozyme Pharma

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

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

Diversification Opportunities for Nuvation Bio and Inozyme Pharma

0.41

Correlation Coefficient

Nuvation Bio  Inozyme Pharma

Very weak diversification

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

Pair Corralation between Nuvation Bio and Inozyme Pharma

Given the investment horizon of 90 days Nuvation Bio is expected to under-perform the Inozyme Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Nuvation Bio is 1.37 times less risky than Inozyme Pharma. The stock trades about -0.38 of its potential returns per unit of risk. The Inozyme Pharma is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  138.00  in Inozyme Pharma on December 4, 2024 and sell it today you would lose (26.00) from holding Inozyme Pharma or give up 18.84% of portfolio value over 90 days.

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

Nuvation Bio  vs.  Inozyme Pharma

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.

Inozyme Pharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inozyme Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly 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 Nuvation Bio and Inozyme Pharma

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

The idea behind Nuvation Bio and Inozyme Pharma 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.