Correlation Between Collegium Pharmaceutical and South American
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and South American 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 South American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and South American Gold, you can compare the effects of market volatilities on Collegium Pharmaceutical and South American 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 South American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and South American.
Diversification Opportunities for Collegium Pharmaceutical and South American
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Collegium and South is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and South American Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South American Gold 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 South American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South American Gold has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and South American go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and South American
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 169.98 times less return on investment than South American. But when comparing it to its historical volatility, Collegium Pharmaceutical is 49.71 times less risky than South American. It trades about 0.03 of its potential returns per unit of risk. South American Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.01 in South American Gold on September 4, 2024 and sell it today you would lose (0.01) from holding South American Gold or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. South American Gold
Performance |
| Timeline |
| Collegium Pharmaceutical |
| South American Gold |
Collegium Pharmaceutical and South American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and South American
The main advantage of trading using opposite Collegium Pharmaceutical and South American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, South American 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 South American will offset losses from the drop in South American's long position.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Silver Spike Investment |
| South American vs. Pacira BioSciences, | South American vs. Collegium Pharmaceutical | South American vs. Prestige Brand Holdings | South American vs. Phibro Animal Health |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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