Correlation Between NLS Pharmaceutics and Puma Biotechnology

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

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

Diversification Opportunities for NLS Pharmaceutics and Puma Biotechnology

0.17

Correlation Coefficient

NLS Pharmaceutics  Puma Biotechnology

Average diversification

The 3 months correlation between NLS and Puma is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NLS Pharmaceutics AG and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and NLS Pharmaceutics 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 NLS Pharmaceutics AG 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 NLS Pharmaceutics i.e., NLS Pharmaceutics and Puma Biotechnology go up and down completely randomly.

Pair Corralation between NLS Pharmaceutics and Puma Biotechnology

Assuming the 90 days horizon NLS Pharmaceutics is expected to generate 1.56 times less return on investment than Puma Biotechnology. In addition to that, NLS Pharmaceutics is 3.16 times more volatile than Puma Biotechnology. It trades about 0.04 of its total potential returns per unit of risk. Puma Biotechnology is currently generating about 0.2 per unit of volatility. If you would invest  279.00  in Puma Biotechnology on December 4, 2024 and sell it today you would earn a total of  60.00  from holding Puma Biotechnology or generate 21.51% return on investment over 90 days.

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

NLS Pharmaceutics AG  vs.  Puma Biotechnology

NLS Pharmaceutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NLS Pharmaceutics AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NLS Pharmaceutics showed solid returns over the last few months and may actually be approaching a breakup point.

Puma Biotechnology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Puma Biotechnology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NLS Pharmaceutics and Puma Biotechnology

The main advantage of trading using opposite NLS Pharmaceutics and Puma Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLS Pharmaceutics 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 NLS Pharmaceutics AG 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.