Correlation Between Puma Biotechnology and Cingulate Warrants

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

By analyzing existing cross correlation between Puma Biotechnology and Cingulate Warrants, you can compare the effects of market volatilities on Puma Biotechnology and Cingulate Warrants 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 Cingulate Warrants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and Cingulate Warrants.

Diversification Opportunities for Puma Biotechnology and Cingulate Warrants

-0.76

Correlation Coefficient

Puma Biotechnology  Cingulate Warrants

Pay attention - limited upside

The 3 months correlation between Puma and Cingulate is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Cingulate Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate Warrants 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 Cingulate Warrants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate Warrants has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Cingulate Warrants go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Cingulate Warrants

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 0.29 times more return on investment than Cingulate Warrants. However, Puma Biotechnology is 3.48 times less risky than Cingulate Warrants. It trades about 0.07 of its potential returns per unit of risk. Cingulate Warrants is currently generating about 0.0 per unit of risk. If you would invest  252.00  in Puma Biotechnology on September 14, 2024 and sell it today you would earn a total of  40.00  from holding Puma Biotechnology or generate 15.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Puma Biotechnology  vs.  Cingulate Warrants

Puma Biotechnology

Risk-Adjusted Performance

5 of 100

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.

Cingulate Warrants

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Cingulate Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Cingulate Warrants is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Puma Biotechnology and Cingulate Warrants

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

The idea behind Puma Biotechnology and Cingulate Warrants 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.