Correlation Between Purple Biotech and Compugen
Can any of the company-specific risk be diversified away by investing in both Purple Biotech and Compugen 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 Purple Biotech and Compugen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Purple Biotech and Compugen, you can compare the effects of market volatilities on Purple Biotech and Compugen 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 Purple Biotech with a short position of Compugen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Purple Biotech and Compugen.
Diversification Opportunities for Purple Biotech and Compugen
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Purple and Compugen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Purple Biotech and Compugen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compugen and Purple Biotech 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 Purple Biotech are associated (or correlated) with Compugen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compugen has no effect on the direction of Purple Biotech i.e., Purple Biotech and Compugen go up and down completely randomly.
Pair Corralation between Purple Biotech and Compugen
Assuming the 90 days trading horizon Purple Biotech is expected to under-perform the Compugen. In addition to that, Purple Biotech is 2.0 times more volatile than Compugen. It trades about -0.41 of its total potential returns per unit of risk. Compugen is currently generating about -0.38 per unit of volatility. If you would invest 64,250 in Compugen on August 29, 2024 and sell it today you would lose (12,590) from holding Compugen or give up 19.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Purple Biotech vs. Compugen
Performance |
| Timeline |
| Purple Biotech |
| Compugen |
Purple Biotech and Compugen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Purple Biotech and Compugen
The main advantage of trading using opposite Purple Biotech and Compugen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purple Biotech position performs unexpectedly, Compugen 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 Compugen will offset losses from the drop in Compugen's long position.| Purple Biotech vs. Kamada | Purple Biotech vs. Bezeq Israeli Telecommunication | Purple Biotech vs. B Communications | Purple Biotech vs. Petrochemical |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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