Correlation Between Puma Biotechnology and Inhibikase Therapeutics

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

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

Diversification Opportunities for Puma Biotechnology and Inhibikase Therapeutics

0.84

Correlation Coefficient

Puma Biotechnology  Inhibikase Therapeutics

Very poor diversification

The 3 months correlation between Puma and Inhibikase is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Inhibikase Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inhibikase Therapeutics 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 Inhibikase Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inhibikase Therapeutics has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Inhibikase Therapeutics go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Inhibikase Therapeutics

Given the investment horizon of 90 days Puma Biotechnology is expected to under-perform the Inhibikase Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Puma Biotechnology is 1.34 times less risky than Inhibikase Therapeutics. The stock trades about -0.04 of its potential returns per unit of risk. The Inhibikase Therapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  289.00  in Inhibikase Therapeutics on September 13, 2024 and sell it today you would earn a total of  35.00  from holding Inhibikase Therapeutics or generate 12.11% 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.  Inhibikase Therapeutics

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.

Inhibikase Therapeutics

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Inhibikase Therapeutics are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Inhibikase Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puma Biotechnology and Inhibikase Therapeutics

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

The idea behind Puma Biotechnology and Inhibikase 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.