Correlation Between Collegium Pharmaceutical and Quantum BioPharma

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

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

Diversification Opportunities for Collegium Pharmaceutical and Quantum BioPharma

-0.14

Correlation Coefficient

Collegium Pharmaceutical  Quantum BioPharma

Good diversification

The 3 months correlation between Collegium and Quantum is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma 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 Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Quantum BioPharma

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 27.42 times less return on investment than Quantum BioPharma. But when comparing it to its historical volatility, Collegium Pharmaceutical is 7.41 times less risky than Quantum BioPharma. It trades about 0.03 of its potential returns per unit of risk. Quantum BioPharma is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  321.00  in Quantum BioPharma on December 22, 2024 and sell it today you would earn a total of  245.00  from holding Quantum BioPharma or generate 76.32% 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.  Quantum BioPharma

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.

Quantum BioPharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum BioPharma are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Quantum BioPharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collegium Pharmaceutical and Quantum BioPharma

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

The idea behind Collegium Pharmaceutical and Quantum BioPharma 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.