Correlation Between Gain Therapeutics and Collplant Biotechnologies

Can any of the company-specific risk be diversified away by investing in both Gain Therapeutics and Collplant Biotechnologies 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 Gain Therapeutics and Collplant Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Gain Therapeutics and Collplant Biotechnologies

-0.67

Correlation Coefficient

Gain Therapeutics  Collplant Biotechnologies

Excellent diversification

The 3 months correlation between Gain and Collplant is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gain Therapeutics and Collplant Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collplant Biotechnologies and Gain Therapeutics 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 Gain Therapeutics are associated (or correlated) with Collplant Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collplant Biotechnologies has no effect on the direction of Gain Therapeutics i.e., Gain Therapeutics and Collplant Biotechnologies go up and down completely randomly.

Pair Corralation between Gain Therapeutics and Collplant Biotechnologies

Given the investment horizon of 90 days Gain Therapeutics is expected to generate 2.23 times more return on investment than Collplant Biotechnologies. However, Gain Therapeutics is 2.23 times more volatile than Collplant Biotechnologies. It trades about 0.16 of its potential returns per unit of risk. Collplant Biotechnologies is currently generating about -0.09 per unit of risk. If you would invest  104.00  in Gain Therapeutics on September 1, 2024 and sell it today you would earn a total of  82.00  from holding Gain Therapeutics or generate 78.85% return on investment over 90 days.

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

Gain Therapeutics  vs.  Collplant Biotechnologies

Gain Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gain Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gain Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Collplant Biotechnologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collplant Biotechnologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Gain Therapeutics and Collplant Biotechnologies

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

The idea behind Gain Therapeutics and Collplant Biotechnologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.