Correlation Between Collegium Pharmaceutical and Malaga Financial

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

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

Diversification Opportunities for Collegium Pharmaceutical and Malaga Financial

-0.24

Correlation Coefficient

Collegium Pharmaceutical  Malaga Financial

Very good diversification

The 3 months correlation between Collegium and Malaga is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial 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 Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Malaga Financial go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Malaga Financial

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to under-perform the Malaga Financial. But the stock apears to be less risky and, when comparing its historical volatility, Collegium Pharmaceutical is 1.76 times less risky than Malaga Financial. The stock trades about -0.24 of its potential returns per unit of risk. The Malaga Financial is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,143  in Malaga Financial on October 5, 2024 and sell it today you would earn a total of  97.00  from holding Malaga Financial or generate 4.53% return on investment over 90 days.

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

Collegium Pharmaceutical  vs.  Malaga Financial

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.

Malaga Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malaga Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Malaga Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Collegium Pharmaceutical and Malaga Financial

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

The idea behind Collegium Pharmaceutical and Malaga Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.