Correlation Between Collegium Pharmaceutical and XTL Biopharmaceutica
Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and XTL Biopharmaceutica 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 XTL Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collegium Pharmaceutical and XTL Biopharmaceuticals Ltd, you can compare the effects of market volatilities on Collegium Pharmaceutical and XTL Biopharmaceutica 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 XTL Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and XTL Biopharmaceutica.
Diversification Opportunities for Collegium Pharmaceutical and XTL Biopharmaceutica
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collegium and XTL is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and XTL Biopharmaceuticals Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTL Biopharmaceuticals 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 XTL Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTL Biopharmaceuticals has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and XTL Biopharmaceutica go up and down completely randomly.
Pair Corralation between Collegium Pharmaceutical and XTL Biopharmaceutica
Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 0.48 times more return on investment than XTL Biopharmaceutica. However, Collegium Pharmaceutical is 2.1 times less risky than XTL Biopharmaceutica. It trades about -0.17 of its potential returns per unit of risk. XTL Biopharmaceuticals Ltd is currently generating about -0.18 per unit of risk. If you would invest 3,346 in Collegium Pharmaceutical on September 2, 2024 and sell it today you would lose (296.00) from holding Collegium Pharmaceutical or give up 8.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collegium Pharmaceutical vs. XTL Biopharmaceuticals Ltd
Performance |
| Timeline |
| Collegium Pharmaceutical |
| XTL Biopharmaceuticals |
Collegium Pharmaceutical and XTL Biopharmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collegium Pharmaceutical and XTL Biopharmaceutica
The main advantage of trading using opposite Collegium Pharmaceutical and XTL Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, XTL Biopharmaceutica 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 XTL Biopharmaceutica will offset losses from the drop in XTL Biopharmaceutica's long position.| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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