Correlation Between Nuvation Bio and Teva Pharma

Can any of the company-specific risk be diversified away by investing in both Nuvation Bio and Teva 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 Teva 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 Teva Pharma Industries, you can compare the effects of market volatilities on Nuvation Bio and Teva 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 Teva Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvation Bio and Teva Pharma.

Diversification Opportunities for Nuvation Bio and Teva Pharma

-0.08

Correlation Coefficient

Nuvation Bio  Teva Pharma

Good diversification

The 3 months correlation between Nuvation and Teva is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and Teva Pharma Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharma Industries 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 Teva Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharma Industries has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and Teva Pharma go up and down completely randomly.

Pair Corralation between Nuvation Bio and Teva Pharma

Given the investment horizon of 90 days Nuvation Bio is expected to generate 2.08 times more return on investment than Teva Pharma. However, Nuvation Bio is 2.08 times more volatile than Teva Pharma Industries. It trades about 0.33 of its potential returns per unit of risk. Teva Pharma Industries is currently generating about -0.27 per unit of risk. If you would invest  229.00  in Nuvation Bio on September 4, 2024 and sell it today you would earn a total of  69.00  from holding Nuvation Bio or generate 30.13% return on investment over 90 days.

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

Nuvation Bio  vs.  Teva Pharma Industries

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 current stock price disturbance, may contribute to short-term losses for the investors.

Teva Pharma Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teva Pharma Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nuvation Bio and Teva Pharma

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

The idea behind Nuvation Bio and Teva Pharma Industries 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 CEOs Directory module to screen CEOs from public companies around the world.