Correlation Between Collegium Pharmaceutical and SIGA Technologies

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

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

Diversification Opportunities for Collegium Pharmaceutical and SIGA Technologies

0.27

Correlation Coefficient

Collegium Pharmaceutical  SIGA Technologies

Modest diversification

The 3 months correlation between Collegium and SIGA is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and SIGA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGA Technologies 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 SIGA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGA Technologies has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and SIGA Technologies go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and SIGA Technologies

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 1.08 times more return on investment than SIGA Technologies. However, Collegium Pharmaceutical is 1.08 times more volatile than SIGA Technologies. It trades about -0.03 of its potential returns per unit of risk. SIGA Technologies is currently generating about -0.17 per unit of risk. If you would invest  3,133  in Collegium Pharmaceutical on December 1, 2024 and sell it today you would lose (228.00) from holding Collegium Pharmaceutical or give up 7.28% 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.  SIGA Technologies

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.

SIGA Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIGA Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Collegium Pharmaceutical and SIGA Technologies

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

The idea behind Collegium Pharmaceutical and SIGA Technologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.