Correlation Between Puma Biotechnology and Surrozen Warrant

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

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

Diversification Opportunities for Puma Biotechnology and Surrozen Warrant

-0.06

Correlation Coefficient

Puma Biotechnology  Surrozen Warrant

Good diversification

The 3 months correlation between Puma and Surrozen is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Surrozen Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surrozen Warrant 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 Surrozen Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surrozen Warrant has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Surrozen Warrant go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Surrozen Warrant

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 37.4 times less return on investment than Surrozen Warrant. But when comparing it to its historical volatility, Puma Biotechnology is 8.41 times less risky than Surrozen Warrant. It trades about 0.03 of its potential returns per unit of risk. Surrozen Warrant is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3.51  in Surrozen Warrant on December 26, 2024 and sell it today you would lose (0.99) from holding Surrozen Warrant or give up 28.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Puma Biotechnology  vs.  Surrozen Warrant

Puma Biotechnology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Puma Biotechnology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Surrozen Warrant

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surrozen Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Surrozen Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puma Biotechnology and Surrozen Warrant

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

The idea behind Puma Biotechnology and Surrozen Warrant 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.