Correlation Between Collegium Pharmaceutical and Lantheus Holdings

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

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

Diversification Opportunities for Collegium Pharmaceutical and Lantheus Holdings

0.0

Correlation Coefficient

Collegium Pharmaceutical  Lantheus Holdings

Pay attention - limited upside

The 3 months correlation between Collegium and Lantheus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Lantheus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantheus Holdings 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 Lantheus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantheus Holdings has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Lantheus Holdings go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Lantheus Holdings

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 1.86 times less return on investment than Lantheus Holdings. But when comparing it to its historical volatility, Collegium Pharmaceutical is 1.25 times less risky than Lantheus Holdings. It trades about 0.04 of its potential returns per unit of risk. Lantheus Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  8,913  in Lantheus Holdings on December 30, 2024 and sell it today you would earn a total of  703.00  from holding Lantheus Holdings or generate 7.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Collegium Pharmaceutical  vs.  Lantheus Holdings

Collegium Pharmaceutical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Lantheus Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lantheus Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Lantheus Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Collegium Pharmaceutical and Lantheus Holdings

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

The idea behind Collegium Pharmaceutical and Lantheus Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.