Correlation Between Nuvalent and Above Food

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

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

Diversification Opportunities for Nuvalent and Above Food

-0.38

Correlation Coefficient

Nuvalent  Above Food

Very good diversification

The 3 months correlation between Nuvalent and Above is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Above Food Ingredients in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Above Food Ingredients and Nuvalent 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 Nuvalent are associated (or correlated) with Above Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Above Food Ingredients has no effect on the direction of Nuvalent i.e., Nuvalent and Above Food go up and down completely randomly.

Pair Corralation between Nuvalent and Above Food

Given the investment horizon of 90 days Nuvalent is expected to under-perform the Above Food. But the stock apears to be less risky and, when comparing its historical volatility, Nuvalent is 4.31 times less risky than Above Food. The stock trades about -0.04 of its potential returns per unit of risk. The Above Food Ingredients is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1.86  in Above Food Ingredients on December 20, 2024 and sell it today you would earn a total of  0.96  from holding Above Food Ingredients or generate 51.61% return on investment over 90 days.

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

Nuvalent  vs.  Above Food Ingredients

Nuvalent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Above Food Ingredients

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Above Food Ingredients are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Above Food showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuvalent and Above Food

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

The idea behind Nuvalent and Above Food Ingredients 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.