Correlation Between Collegium Pharmaceutical and DarioHealth Corp

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

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

Diversification Opportunities for Collegium Pharmaceutical and DarioHealth Corp

0.91

Correlation Coefficient

Collegium Pharmaceutical  DarioHealth Corp

Almost no diversification

The 3 months correlation between Collegium and DarioHealth is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp 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 DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and DarioHealth Corp

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 0.38 times more return on investment than DarioHealth Corp. However, Collegium Pharmaceutical is 2.61 times less risky than DarioHealth Corp. It trades about 0.02 of its potential returns per unit of risk. DarioHealth Corp is currently generating about -0.03 per unit of risk. If you would invest  2,695  in Collegium Pharmaceutical on October 5, 2024 and sell it today you would earn a total of  168.00  from holding Collegium Pharmaceutical or generate 6.23% return on investment over 90 days.

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

Collegium Pharmaceutical  vs.  DarioHealth Corp

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.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Collegium Pharmaceutical and DarioHealth Corp

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

The idea behind Collegium Pharmaceutical and DarioHealth Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.