Correlation Between PennyMac Finl and Nuvectis Pharma

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

By analyzing existing cross correlation between PennyMac Finl Svcs and Nuvectis Pharma, you can compare the effects of market volatilities on PennyMac Finl and Nuvectis 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 PennyMac Finl with a short position of Nuvectis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennyMac Finl and Nuvectis Pharma.

Diversification Opportunities for PennyMac Finl and Nuvectis Pharma

-0.09

Correlation Coefficient

PennyMac Finl  Nuvectis Pharma

Good diversification

The 3 months correlation between PennyMac and Nuvectis is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding PennyMac Finl Svcs and Nuvectis Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvectis Pharma and PennyMac Finl 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 PennyMac Finl Svcs are associated (or correlated) with Nuvectis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuvectis Pharma has no effect on the direction of PennyMac Finl i.e., PennyMac Finl and Nuvectis Pharma go up and down completely randomly.

Pair Corralation between PennyMac Finl and Nuvectis Pharma

Given the investment horizon of 90 days PennyMac Finl Svcs is expected to generate 0.37 times more return on investment than Nuvectis Pharma. However, PennyMac Finl Svcs is 2.73 times less risky than Nuvectis Pharma. It trades about 0.06 of its potential returns per unit of risk. Nuvectis Pharma is currently generating about 0.0 per unit of risk. If you would invest  6,481  in PennyMac Finl Svcs on October 5, 2024 and sell it today you would earn a total of  3,503  from holding PennyMac Finl Svcs or generate 54.05% return on investment over 90 days.

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

PennyMac Finl Svcs  vs.  Nuvectis Pharma

PennyMac Finl Svcs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennyMac Finl Svcs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PennyMac Finl is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Nuvectis Pharma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuvectis Pharma are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Nuvectis Pharma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PennyMac Finl and Nuvectis Pharma

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

The idea behind PennyMac Finl Svcs and Nuvectis Pharma 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.