Correlation Between Dominari Holdings and Puma Biotechnology

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

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

Diversification Opportunities for Dominari Holdings and Puma Biotechnology

-0.52

Correlation Coefficient

Dominari Holdings  Puma Biotechnology

Excellent diversification

The 3 months correlation between Dominari and Puma is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dominari Holdings and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and Dominari Holdings 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 Dominari Holdings 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 Dominari Holdings i.e., Dominari Holdings and Puma Biotechnology go up and down completely randomly.

Pair Corralation between Dominari Holdings and Puma Biotechnology

Given the investment horizon of 90 days Dominari Holdings is expected to generate 15.2 times less return on investment than Puma Biotechnology. But when comparing it to its historical volatility, Dominari Holdings is 1.13 times less risky than Puma Biotechnology. It trades about 0.01 of its potential returns per unit of risk. Puma Biotechnology is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  236.00  in Puma Biotechnology on September 4, 2024 and sell it today you would earn a total of  103.00  from holding Puma Biotechnology or generate 43.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dominari Holdings  vs.  Puma Biotechnology

Dominari Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Dominari Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Puma Biotechnology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 12 (%) 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 Dominari Holdings and Puma Biotechnology

The main advantage of trading using opposite Dominari Holdings and Puma Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominari Holdings 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 Dominari Holdings 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.