Correlation Between South American and Collegium Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both South American and Collegium Pharmaceutical 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 South American and Collegium Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South American Gold and Collegium Pharmaceutical, you can compare the effects of market volatilities on South American and Collegium Pharmaceutical 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 South American with a short position of Collegium Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of South American and Collegium Pharmaceutical.
Diversification Opportunities for South American and Collegium Pharmaceutical
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between South and Collegium is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding South American Gold and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical and South American 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 South American Gold are associated (or correlated) with Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of South American i.e., South American and Collegium Pharmaceutical go up and down completely randomly.
Pair Corralation between South American and Collegium Pharmaceutical
Given the investment horizon of 90 days South American Gold is expected to generate 74.18 times more return on investment than Collegium Pharmaceutical. However, South American is 74.18 times more volatile than Collegium Pharmaceutical. It trades about 0.16 of its potential returns per unit of risk. Collegium Pharmaceutical is currently generating about 0.04 per unit of risk. If you would invest 0.01 in South American Gold on September 2, 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 | 99.8% |
| Values | Daily Returns |
South American Gold vs. Collegium Pharmaceutical
Performance |
| Timeline |
| South American Gold |
| Collegium Pharmaceutical |
South American and Collegium Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South American and Collegium Pharmaceutical
The main advantage of trading using opposite South American and Collegium Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South American position performs unexpectedly, Collegium Pharmaceutical 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 Collegium Pharmaceutical will offset losses from the drop in Collegium Pharmaceutical's long position.| South American vs. Pacira BioSciences, | South American vs. Collegium Pharmaceutical | South American vs. Prestige Brand Holdings | South American vs. Phibro Animal Health |
| Collegium Pharmaceutical vs. Phibro Animal Health | Collegium Pharmaceutical vs. ANI Pharmaceuticals | Collegium Pharmaceutical vs. Procaps Group SA | Collegium Pharmaceutical vs. Amphastar P |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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