Correlation Between Quantum BioPharma and Collegium Pharmaceutical

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

By analyzing existing cross correlation between Quantum BioPharma and Collegium Pharmaceutical, you can compare the effects of market volatilities on Quantum BioPharma and Collegium Pharmaceutical 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 Quantum BioPharma with a short position of Collegium Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantum BioPharma and Collegium Pharmaceutical.

Diversification Opportunities for Quantum BioPharma and Collegium Pharmaceutical

-0.14

Correlation Coefficient

Quantum BioPharma  Collegium Pharmaceutical

Good diversification

The 3 months correlation between Quantum and Collegium is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Quantum BioPharma and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical and Quantum BioPharma 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 Quantum BioPharma are associated (or correlated) with Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of Quantum BioPharma i.e., Quantum BioPharma and Collegium Pharmaceutical go up and down completely randomly.

Pair Corralation between Quantum BioPharma and Collegium Pharmaceutical

Given the investment horizon of 90 days Quantum BioPharma is expected to generate 7.41 times more return on investment than Collegium Pharmaceutical. However, Quantum BioPharma is 7.41 times more volatile than Collegium Pharmaceutical. It trades about 0.12 of its potential returns per unit of risk. Collegium Pharmaceutical is currently generating about 0.03 per unit of risk. If you would invest  321.00  in Quantum BioPharma on December 22, 2024 and sell it today you would earn a total of  245.00  from holding Quantum BioPharma or generate 76.32% return on investment over 90 days.

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

Quantum BioPharma  vs.  Collegium Pharmaceutical

Quantum BioPharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quantum BioPharma are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Quantum BioPharma displayed solid returns over the last few months and may actually be approaching a breakup point.

Collegium Pharmaceutical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Collegium Pharmaceutical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Quantum BioPharma and Collegium Pharmaceutical

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

The idea behind Quantum BioPharma and Collegium Pharmaceutical 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.