Correlation Between Puma Biotechnology and Black Diamond

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Can any of the company-specific risk be diversified away by investing in both Puma Biotechnology and Black Diamond 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 Puma Biotechnology and Black Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Puma Biotechnology and Black Diamond Therapeutics, you can compare the effects of market volatilities on Puma Biotechnology and Black Diamond 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 Puma Biotechnology with a short position of Black Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and Black Diamond.

Diversification Opportunities for Puma Biotechnology and Black Diamond

PumaBlackDiversified AwayPumaBlackDiversified Away100%
-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Puma and Black is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap and Puma Biotechnology 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 Puma Biotechnology are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Black Diamond go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Black Diamond

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 1.15 times more return on investment than Black Diamond. However, Puma Biotechnology is 1.15 times more volatile than Black Diamond Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Black Diamond Therapeutics is currently generating about -0.24 per unit of risk. If you would invest  256.00  in Puma Biotechnology on September 19, 2024 and sell it today you would earn a total of  36.00  from holding Puma Biotechnology or generate 14.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Puma Biotechnology  vs.  Black Diamond Therapeutics

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -40-20020
JavaScript chart by amCharts 3.21.15PBYI BDTX
       Timeline  
Puma Biotechnology 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 5 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.42.62.833.23.43.6
Black Diamond Therap 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Diamond Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.533.544.555.5

Puma Biotechnology and Black Diamond Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.92-10.43-6.93-3.44-0.05833.447.0710.6914.3117.94 0.0120.0140.0160.0180.0200.0220.024
JavaScript chart by amCharts 3.21.15PBYI BDTX
       Returns  

Pair Trading with Puma Biotechnology and Black Diamond

The main advantage of trading using opposite Puma Biotechnology and Black Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology position performs unexpectedly, Black Diamond 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 Black Diamond will offset losses from the drop in Black Diamond's long position.
The idea behind Puma Biotechnology and Black Diamond Therapeutics 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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