Correlation Between Collegium Pharmaceutical and Applied Biosciences
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and Applied Biosciences 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 Collegium Pharmaceutical and Applied Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and Applied Biosciences Corp, you can compare the effects of market volatilities on Collegium Pharmaceutical and Applied Biosciences 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 Collegium Pharmaceutical with a short position of Applied Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Applied Biosciences.
Diversification Opportunities for Collegium Pharmaceutical and Applied Biosciences
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Collegium and Applied is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Applied Biosciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Biosciences Corp and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with Applied Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Biosciences Corp has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Applied Biosciences go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and Applied Biosciences
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 11.39 times less return on investment than Applied Biosciences. But when comparing it to its historical volatility, Collegium Pharmaceutical is 1.11 times less risky than Applied Biosciences. It trades about 0.02 of its potential returns per unit of risk. Applied Biosciences Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.08 in Applied Biosciences Corp on August 31, 2024 and sell it today you would earn a total of 0.01 from holding Applied Biosciences Corp or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.82% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. Applied Biosciences Corp
Performance |
| Timeline |
| Collegium Pharmaceutical |
| Applied Biosciences Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Collegium Pharmaceutical and Applied Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and Applied Biosciences
The main advantage of trading using opposite Collegium Pharmaceutical and Applied Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, Applied Biosciences 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 Applied Biosciences will offset losses from the drop in Applied Biosciences' long position.| Collegium Pharmaceutical vs. Bausch Health Companies | Collegium Pharmaceutical vs. Haleon plc | Collegium Pharmaceutical vs. Intracellular Th |
| Applied Biosciences vs. Prestige Brand Holdings | Applied Biosciences vs. Collegium Pharmaceutical | Applied Biosciences vs. Regencell Bioscience Holdings | Applied Biosciences vs. Sunshine Biopharma Warrant |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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