Correlation Between Puma Biotechnology and Hillevax

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

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

Diversification Opportunities for Puma Biotechnology and Hillevax

0.81

Correlation Coefficient

Puma Biotechnology  Hillevax

Very poor diversification

The 3 months correlation between Puma and Hillevax is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Hillevax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hillevax 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 Hillevax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hillevax has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Hillevax go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Hillevax

Given the investment horizon of 90 days Puma Biotechnology is expected to under-perform the Hillevax. In addition to that, Puma Biotechnology is 2.23 times more volatile than Hillevax. It trades about -0.01 of its total potential returns per unit of risk. Hillevax is currently generating about 0.02 per unit of volatility. If you would invest  198.00  in Hillevax on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Hillevax or generate 0.51% return on investment over 90 days.

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

Puma Biotechnology  vs.  Hillevax

Puma Biotechnology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 6 (%) 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.

Hillevax

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hillevax are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Hillevax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Puma Biotechnology and Hillevax

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

The idea behind Puma Biotechnology and Hillevax 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.