Correlation Between Puma Biotechnology and Agios Pharm
Can any of the company-specific risk be diversified away by investing in both Puma Biotechnology and Agios Pharm 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 Puma Biotechnology and Agios Pharm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puma Biotechnology and Agios Pharm, you can compare the effects of market volatilities on Puma Biotechnology and Agios Pharm 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 Puma Biotechnology with a short position of Agios Pharm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and Agios Pharm.
Diversification Opportunities for Puma Biotechnology and Agios Pharm
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Puma and Agios is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Puma Biotechnology 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 Puma Biotechnology are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Agios Pharm go up and down completely randomly.
Pair Corralation between Puma Biotechnology and Agios Pharm
Given the investment horizon of 90 days Puma Biotechnology is expected to generate 1.75 times less return on investment than Agios Pharm. In addition to that, Puma Biotechnology is 1.75 times more volatile than Agios Pharm. It trades about 0.1 of its total potential returns per unit of risk. Agios Pharm is currently generating about 0.32 per unit of volatility. If you would invest 4,608 in Agios Pharm on August 29, 2024 and sell it today you would earn a total of 1,302 from holding Agios Pharm or generate 28.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Puma Biotechnology vs. Agios Pharm
Performance |
| Timeline |
| Puma Biotechnology |
| Agios Pharm |
Puma Biotechnology and Agios Pharm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Puma Biotechnology and Agios Pharm
The main advantage of trading using opposite Puma Biotechnology and Agios Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology position performs unexpectedly, Agios Pharm 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 Agios Pharm will offset losses from the drop in Agios Pharm's long position.| Puma Biotechnology vs. Ultragenyx | Puma Biotechnology vs. Crinetics Pharmaceuticals | Puma Biotechnology vs. Arvinas | Puma Biotechnology vs. Revolution Medicines |
| Agios Pharm vs. Blueprint Medicines Corp | Agios Pharm vs. Biomarin Pharmaceutical | Agios Pharm vs. Ideaya Biosciences | Agios Pharm vs. AnaptysBio |
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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