Correlation Between Puma Biotechnology and 180 Life

Can any of the company-specific risk be diversified away by investing in both Puma Biotechnology and 180 Life 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 180 Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Puma Biotechnology and 180 Life Sciences, you can compare the effects of market volatilities on Puma Biotechnology and 180 Life 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 180 Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma Biotechnology and 180 Life.

Diversification Opportunities for Puma Biotechnology and 180 Life

0.24

Correlation Coefficient

Puma Biotechnology  180 Life

Modest diversification

The 3 months correlation between Puma and 180 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and 180 Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 180 Life Sciences 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 180 Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 180 Life Sciences has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and 180 Life go up and down completely randomly.

Pair Corralation between Puma Biotechnology and 180 Life

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 7.95 times less return on investment than 180 Life. But when comparing it to its historical volatility, Puma Biotechnology is 9.34 times less risky than 180 Life. It trades about 0.09 of its potential returns per unit of risk. 180 Life Sciences is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  203.00  in 180 Life Sciences on September 18, 2024 and sell it today you would lose (10.00) from holding 180 Life Sciences or give up 4.93% of portfolio value over 90 days.

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

Puma Biotechnology  vs.  180 Life Sciences

Puma Biotechnology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Puma Biotechnology are ranked lower than 6 (%) 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.

180 Life Sciences

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 180 Life Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, 180 Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Puma Biotechnology and 180 Life

The main advantage of trading using opposite Puma Biotechnology and 180 Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Puma Biotechnology position performs unexpectedly, 180 Life 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 180 Life will offset losses from the drop in 180 Life's long position.

The idea behind Puma Biotechnology and 180 Life Sciences 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..