Correlation Between Sesen Bio and Nuvalent

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Can any of the company-specific risk be diversified away by investing in both Sesen Bio 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 Sesen Bio and Nuvalent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sesen Bio and Nuvalent, you can compare the effects of market volatilities on Sesen Bio 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 Sesen Bio with a short position of Nuvalent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sesen Bio and Nuvalent.

Diversification Opportunities for Sesen Bio and Nuvalent

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Sesen and Nuvalent is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sesen Bio and Nuvalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuvalent and Sesen 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 Sesen Bio 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 Sesen Bio i.e., Sesen Bio and Nuvalent go up and down completely randomly.

Pair Corralation between Sesen Bio and Nuvalent

If you would invest  63.00  in Sesen Bio on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Sesen Bio or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

Sesen Bio  vs.  Nuvalent

 Performance 
       Timeline  
Sesen Bio 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Sesen Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Sesen Bio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Nuvalent 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Sesen Bio and Nuvalent Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sesen Bio and Nuvalent

The main advantage of trading using opposite Sesen Bio and Nuvalent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sesen Bio 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 Sesen Bio 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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