Correlation Between Puma Biotechnology and Cidara Therapeutics
Can any of the company-specific risk be diversified away by investing in both Puma Biotechnology and Cidara Therapeutics 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 Cidara Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puma Biotechnology and Cidara Therapeutics, you can compare the effects of market volatilities on Puma Biotechnology and Cidara Therapeutics 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 Cidara Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and Cidara Therapeutics.
Diversification Opportunities for Puma Biotechnology and Cidara Therapeutics
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Puma and Cidara is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Cidara Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cidara Therapeutics 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 Cidara Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cidara Therapeutics has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Cidara Therapeutics go up and down completely randomly.
Pair Corralation between Puma Biotechnology and Cidara Therapeutics
Given the investment horizon of 90 days Puma Biotechnology is expected to generate 249.63 times less return on investment than Cidara Therapeutics. But when comparing it to its historical volatility, Puma Biotechnology is 13.97 times less risky than Cidara Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Cidara Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,760 in Cidara Therapeutics on October 7, 2024 and sell it today you would lose (98.00) from holding Cidara Therapeutics or give up 3.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Puma Biotechnology vs. Cidara Therapeutics
Performance |
| Timeline |
| Puma Biotechnology |
| Cidara Therapeutics |
Puma Biotechnology and Cidara Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Puma Biotechnology and Cidara Therapeutics
The main advantage of trading using opposite Puma Biotechnology and Cidara Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology position performs unexpectedly, Cidara Therapeutics 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 Cidara Therapeutics will offset losses from the drop in Cidara Therapeutics' long position.| Puma Biotechnology vs. Ultragenyx | Puma Biotechnology vs. Crinetics Pharmaceuticals | Puma Biotechnology vs. Arvinas | Puma Biotechnology vs. Revolution Medicines |
| Cidara Therapeutics vs. CytomX Therapeutics | Cidara Therapeutics vs. Clearside Biomedical | Cidara Therapeutics vs. GlycoMimetics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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