Correlation Between Structure Therapeutics and Puma Biotechnology

Can any of the company-specific risk be diversified away by investing in both Structure Therapeutics and Puma Biotechnology 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 Structure Therapeutics and Puma Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Structure Therapeutics American and Puma Biotechnology, you can compare the effects of market volatilities on Structure Therapeutics and Puma Biotechnology 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 Structure Therapeutics with a short position of Puma Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Structure Therapeutics and Puma Biotechnology.

Diversification Opportunities for Structure Therapeutics and Puma Biotechnology

-0.4

Correlation Coefficient

Structure Therapeutics  Puma Biotechnology

Very good diversification

The 3 months correlation between Structure and Puma is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Structure Therapeutics America and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and Structure Therapeutics 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 Structure Therapeutics American are associated (or correlated) with Puma Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puma Biotechnology has no effect on the direction of Structure Therapeutics i.e., Structure Therapeutics and Puma Biotechnology go up and down completely randomly.

Pair Corralation between Structure Therapeutics and Puma Biotechnology

Given the investment horizon of 90 days Structure Therapeutics American is expected to under-perform the Puma Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Structure Therapeutics American is 1.04 times less risky than Puma Biotechnology. The stock trades about -0.1 of its potential returns per unit of risk. The Puma Biotechnology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  313.00  in Puma Biotechnology on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Puma Biotechnology or generate 0.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Structure Therapeutics America  vs.  Puma Biotechnology

Structure Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Structure Therapeutics American has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Puma Biotechnology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Puma Biotechnology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Structure Therapeutics and Puma Biotechnology

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

The idea behind Structure Therapeutics American and Puma Biotechnology 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.