Correlation Between Nuvalent and Kulicke

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

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

Diversification Opportunities for Nuvalent and Kulicke

0.6

Correlation Coefficient

Nuvalent  Kulicke

Poor diversification

The 3 months correlation between Nuvalent and Kulicke is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nuvalent and Kulicke and Soffa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kulicke and Soffa 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 Kulicke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kulicke and Soffa has no effect on the direction of Nuvalent i.e., Nuvalent and Kulicke go up and down completely randomly.

Pair Corralation between Nuvalent and Kulicke

Given the investment horizon of 90 days Nuvalent is expected to generate 1.29 times more return on investment than Kulicke. However, Nuvalent is 1.29 times more volatile than Kulicke and Soffa. It trades about -0.04 of its potential returns per unit of risk. Kulicke and Soffa is currently generating about -0.2 per unit of risk. If you would invest  8,422  in Nuvalent on December 20, 2024 and sell it today you would lose (665.00) from holding Nuvalent or give up 7.9% of portfolio value over 90 days.

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

Nuvalent  vs.  Kulicke and Soffa

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.

Kulicke and Soffa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kulicke and Soffa has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Nuvalent and Kulicke

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

The idea behind Nuvalent and Kulicke and Soffa 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.