Correlation Between Collegium Pharmaceutical and Amylyx Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Collegium Pharmaceutical and Amylyx Pharmaceuticals, you can compare the effects of market volatilities on Collegium Pharmaceutical and Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Amylyx Pharmaceuticals.

Diversification Opportunities for Collegium Pharmaceutical and Amylyx Pharmaceuticals

-0.44

Correlation Coefficient

Collegium Pharmaceutical  Amylyx Pharmaceuticals

Very good diversification

The 3 months correlation between Collegium and Amylyx is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Amylyx Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amylyx Pharmaceuticals has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Amylyx Pharmaceuticals go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Amylyx Pharmaceuticals

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 0.47 times more return on investment than Amylyx Pharmaceuticals. However, Collegium Pharmaceutical is 2.13 times less risky than Amylyx Pharmaceuticals. It trades about -0.24 of its potential returns per unit of risk. Amylyx Pharmaceuticals is currently generating about -0.44 per unit of risk. If you would invest  3,112  in Collegium Pharmaceutical on October 5, 2024 and sell it today you would lose (247.00) from holding Collegium Pharmaceutical or give up 7.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Collegium Pharmaceutical  vs.  Amylyx Pharmaceuticals

Collegium Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collegium Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amylyx Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collegium Pharmaceutical and Amylyx Pharmaceuticals

The main advantage of trading using opposite Collegium Pharmaceutical and Amylyx Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical position performs unexpectedly, Amylyx Pharmaceuticals 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 Amylyx Pharmaceuticals will offset losses from the drop in Amylyx Pharmaceuticals' long position.

The idea behind Collegium Pharmaceutical and Amylyx Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..