Correlation Between Collegium Pharmaceutical and Regencell Bioscience

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

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

Diversification Opportunities for Collegium Pharmaceutical and Regencell Bioscience

-0.31

Correlation Coefficient

Collegium Pharmaceutical  Regencell Bioscience

Very good diversification

The 3 months correlation between Collegium and Regencell is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Regencell Bioscience Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regencell Bioscience and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with Regencell Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regencell Bioscience has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Regencell Bioscience go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Regencell Bioscience

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to under-perform the Regencell Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Collegium Pharmaceutical is 3.98 times less risky than Regencell Bioscience. The stock trades about -0.14 of its potential returns per unit of risk. The Regencell Bioscience Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  743.00  in Regencell Bioscience Holdings on September 4, 2024 and sell it today you would lose (161.00) from holding Regencell Bioscience Holdings or give up 21.67% of portfolio value over 90 days.

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

Collegium Pharmaceutical  vs.  Regencell Bioscience Holdings

Collegium Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collegium Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Regencell Bioscience

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Regencell Bioscience Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Regencell Bioscience is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Collegium Pharmaceutical and Regencell Bioscience

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

The idea behind Collegium Pharmaceutical and Regencell Bioscience Holdings 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.