Correlation Between Nuvation Bio and X4 Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Nuvation Bio and X4 Pharmaceuticals 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 X4 Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nuvation Bio and X4 Pharmaceuticals, you can compare the effects of market volatilities on Nuvation Bio and X4 Pharmaceuticals 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 X4 Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuvation Bio and X4 Pharmaceuticals.

Diversification Opportunities for Nuvation Bio and X4 Pharmaceuticals

-0.17

Correlation Coefficient

Nuvation Bio  X4 Pharmaceuticals

Good diversification

The 3 months correlation between Nuvation and XFOR is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nuvation Bio and X4 Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X4 Pharmaceuticals 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 X4 Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X4 Pharmaceuticals has no effect on the direction of Nuvation Bio i.e., Nuvation Bio and X4 Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nuvation Bio and X4 Pharmaceuticals

Given the investment horizon of 90 days Nuvation Bio is expected to generate 7.65 times less return on investment than X4 Pharmaceuticals. But when comparing it to its historical volatility, Nuvation Bio is 2.58 times less risky than X4 Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. X4 Pharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  71.00  in X4 Pharmaceuticals on September 22, 2024 and sell it today you would lose (10.00) from holding X4 Pharmaceuticals or give up 14.08% of portfolio value over 90 days.

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

Nuvation Bio  vs.  X4 Pharmaceuticals

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.

X4 Pharmaceuticals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in X4 Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, X4 Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuvation Bio and X4 Pharmaceuticals

The main advantage of trading using opposite Nuvation Bio and X4 Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuvation Bio position performs unexpectedly, X4 Pharmaceuticals 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 X4 Pharmaceuticals will offset losses from the drop in X4 Pharmaceuticals' long position.

The idea behind Nuvation Bio and X4 Pharmaceuticals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.