Correlation Between Collegium Pharmaceutical and KKR Co

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

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

Diversification Opportunities for Collegium Pharmaceutical and KKR Co

0.36

Correlation Coefficient

Collegium Pharmaceutical  KKR Co

Weak diversification

The 3 months correlation between Collegium and KKR is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and KKR Co go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and KKR Co

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 1.14 times more return on investment than KKR Co. However, Collegium Pharmaceutical is 1.14 times more volatile than KKR Co LP. It trades about -0.03 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.14 per unit of risk. If you would invest  3,071  in Collegium Pharmaceutical on November 27, 2024 and sell it today you would lose (189.00) from holding Collegium Pharmaceutical or give up 6.15% of portfolio value over 90 days.

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

Collegium Pharmaceutical  vs.  KKR Co LP

Collegium Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Collegium Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Collegium Pharmaceutical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

KKR Co LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Collegium Pharmaceutical and KKR Co

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

The idea behind Collegium Pharmaceutical and KKR Co LP 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.