Correlation Between Oxford Cannabinoid and Nuvalent

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

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

Diversification Opportunities for Oxford Cannabinoid and Nuvalent

0.0

Correlation Coefficient

Oxford Cannabinoid  Nuvalent

Pay attention - limited upside

The 3 months correlation between Oxford and Nuvalent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oxford Cannabinoid Technologie and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Oxford Cannabinoid 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 Oxford Cannabinoid Technologies are associated (or correlated) with Nuvalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvalent has no effect on the direction of Oxford Cannabinoid i.e., Oxford Cannabinoid and Nuvalent go up and down completely randomly.

Pair Corralation between Oxford Cannabinoid and Nuvalent

Assuming the 90 days horizon Oxford Cannabinoid Technologies is expected to generate 17.45 times more return on investment than Nuvalent. However, Oxford Cannabinoid is 17.45 times more volatile than Nuvalent. It trades about 0.07 of its potential returns per unit of risk. Nuvalent is currently generating about 0.05 per unit of risk. If you would invest  0.51  in Oxford Cannabinoid Technologies on September 24, 2024 and sell it today you would lose (0.23) from holding Oxford Cannabinoid Technologies or give up 45.1% of portfolio value over 90 days.

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

Oxford Cannabinoid Technologie  vs.  Nuvalent

Oxford Cannabinoid

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Oxford Cannabinoid Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Oxford Cannabinoid is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nuvalent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuvalent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Oxford Cannabinoid and Nuvalent

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

The idea behind Oxford Cannabinoid Technologies and Nuvalent 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.