Correlation Between Puma Biotechnology and ABVC Biopharma

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

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

Diversification Opportunities for Puma Biotechnology and ABVC Biopharma

-0.54

Correlation Coefficient

Puma Biotechnology  ABVC Biopharma

Excellent diversification

The 3 months correlation between Puma and ABVC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and ABVC Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABVC Biopharma and Puma Biotechnology 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 Puma Biotechnology are associated (or correlated) with ABVC Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABVC Biopharma has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and ABVC Biopharma go up and down completely randomly.

Pair Corralation between Puma Biotechnology and ABVC Biopharma

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 0.7 times more return on investment than ABVC Biopharma. However, Puma Biotechnology is 1.44 times less risky than ABVC Biopharma. It trades about 0.0 of its potential returns per unit of risk. ABVC Biopharma is currently generating about -0.03 per unit of risk. If you would invest  389.00  in Puma Biotechnology on September 15, 2024 and sell it today you would lose (101.00) from holding Puma Biotechnology or give up 25.96% of portfolio value over 90 days.

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

Puma Biotechnology  vs.  ABVC Biopharma

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.

ABVC Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABVC Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Puma Biotechnology and ABVC Biopharma

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

The idea behind Puma Biotechnology and ABVC Biopharma 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.