Correlation Between Benitec Biopharma and Puma Biotechnology

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

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

Diversification Opportunities for Benitec Biopharma and Puma Biotechnology

0.51

Correlation Coefficient

Benitec Biopharma  Puma Biotechnology

Very weak diversification

The 3 months correlation between Benitec and Puma is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Benitec Biopharma Ltd and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and Benitec 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 Benitec Biopharma Ltd are associated (or correlated) with Puma Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puma Biotechnology has no effect on the direction of Benitec Biopharma i.e., Benitec Biopharma and Puma Biotechnology go up and down completely randomly.

Pair Corralation between Benitec Biopharma and Puma Biotechnology

Given the investment horizon of 90 days Benitec Biopharma Ltd is expected to generate 1.21 times more return on investment than Puma Biotechnology. However, Benitec Biopharma is 1.21 times more volatile than Puma Biotechnology. It trades about 0.12 of its potential returns per unit of risk. Puma Biotechnology is currently generating about 0.07 per unit of risk. If you would invest  842.00  in Benitec Biopharma Ltd on September 14, 2024 and sell it today you would earn a total of  335.00  from holding Benitec Biopharma Ltd or generate 39.79% return on investment over 90 days.

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

Benitec Biopharma Ltd  vs.  Puma Biotechnology

Benitec Biopharma

Risk-Adjusted Performance

9 of 100

OK

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

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.

Pair Trading with Benitec Biopharma and Puma Biotechnology

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

The idea behind Benitec Biopharma Ltd and Puma Biotechnology 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..