Correlation Between Gilead Sciences and Collplant Biotechnologies

Can any of the company-specific risk be diversified away by investing in both Gilead Sciences and Collplant Biotechnologies 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 Gilead Sciences and Collplant Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gilead Sciences and Collplant Biotechnologies, you can compare the effects of market volatilities on Gilead Sciences and Collplant Biotechnologies 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 Gilead Sciences with a short position of Collplant Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Collplant Biotechnologies.

Diversification Opportunities for Gilead Sciences and Collplant Biotechnologies

-0.79

Correlation Coefficient

Gilead Sciences  Collplant Biotechnologies

Pay attention - limited upside

The 3 months correlation between Gilead and Collplant is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Collplant Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collplant Biotechnologies and Gilead Sciences 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 Gilead Sciences are associated (or correlated) with Collplant Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collplant Biotechnologies has no effect on the direction of Gilead Sciences i.e., Gilead Sciences and Collplant Biotechnologies go up and down completely randomly.

Pair Corralation between Gilead Sciences and Collplant Biotechnologies

Given the investment horizon of 90 days Gilead Sciences is expected to generate 0.44 times more return on investment than Collplant Biotechnologies. However, Gilead Sciences is 2.29 times less risky than Collplant Biotechnologies. It trades about 0.22 of its potential returns per unit of risk. Collplant Biotechnologies is currently generating about -0.13 per unit of risk. If you would invest  9,137  in Gilead Sciences on December 29, 2024 and sell it today you would earn a total of  2,042  from holding Gilead Sciences or generate 22.35% return on investment over 90 days.

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

Gilead Sciences  vs.  Collplant Biotechnologies

Gilead Sciences

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gilead Sciences are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Gilead Sciences exhibited solid returns over the last few months and may actually be approaching a breakup point.

Collplant Biotechnologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Collplant Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gilead Sciences and Collplant Biotechnologies

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

The idea behind Gilead Sciences and Collplant Biotechnologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.