Correlation Between Puma Biotechnology and ImmuCell

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

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

Diversification Opportunities for Puma Biotechnology and ImmuCell

0.47

Correlation Coefficient

Puma Biotechnology  ImmuCell

Very weak diversification

The 3 months correlation between Puma and ImmuCell is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and ImmuCell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImmuCell 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 ImmuCell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImmuCell has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and ImmuCell go up and down completely randomly.

Pair Corralation between Puma Biotechnology and ImmuCell

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 3.45 times less return on investment than ImmuCell. In addition to that, Puma Biotechnology is 1.37 times more volatile than ImmuCell. It trades about 0.04 of its total potential returns per unit of risk. ImmuCell is currently generating about 0.19 per unit of volatility. If you would invest  361.00  in ImmuCell on October 22, 2024 and sell it today you would earn a total of  189.00  from holding ImmuCell or generate 52.35% return on investment over 90 days.

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

Puma Biotechnology  vs.  ImmuCell

Puma Biotechnology

Risk-Adjusted Performance

3 of 100

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.

ImmuCell

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ImmuCell are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, ImmuCell exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puma Biotechnology and ImmuCell

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

The idea behind Puma Biotechnology and ImmuCell 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.