Correlation Between Estrella Immunopharma and Puma Biotechnology

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

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

Diversification Opportunities for Estrella Immunopharma and Puma Biotechnology

0.5

Correlation Coefficient

Estrella Immunopharma  Puma Biotechnology

Very weak diversification

The 3 months correlation between Estrella and Puma is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Estrella Immunopharma and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and Estrella Immunopharma 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 Estrella Immunopharma 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 Estrella Immunopharma i.e., Estrella Immunopharma and Puma Biotechnology go up and down completely randomly.

Pair Corralation between Estrella Immunopharma and Puma Biotechnology

Assuming the 90 days horizon Estrella Immunopharma is expected to generate 8.21 times more return on investment than Puma Biotechnology. However, Estrella Immunopharma is 8.21 times more volatile than Puma Biotechnology. It trades about 0.19 of its potential returns per unit of risk. Puma Biotechnology is currently generating about 0.07 per unit of risk. If you would invest  6.06  in Estrella Immunopharma on September 15, 2024 and sell it today you would earn a total of  3.04  from holding Estrella Immunopharma or generate 50.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	32.81%
Values	Daily Returns

Estrella Immunopharma  vs.  Puma Biotechnology

Estrella Immunopharma

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Estrella Immunopharma are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Estrella Immunopharma showed 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 Estrella Immunopharma and Puma Biotechnology

The main advantage of trading using opposite Estrella Immunopharma and Puma Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Estrella Immunopharma 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 Estrella Immunopharma 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.

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 Stocks Directory module to find actively traded stocks across global markets.