Correlation Between Puma Biotechnology and Theriva Biologics

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

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

Diversification Opportunities for Puma Biotechnology and Theriva Biologics

-0.58

Correlation Coefficient

Puma Biotechnology  Theriva Biologics

Excellent diversification

The 3 months correlation between Puma and Theriva is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Puma Biotechnology and Theriva Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theriva Biologics 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 Theriva Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theriva Biologics has no effect on the direction of Puma Biotechnology i.e., Puma Biotechnology and Theriva Biologics go up and down completely randomly.

Pair Corralation between Puma Biotechnology and Theriva Biologics

Given the investment horizon of 90 days Puma Biotechnology is expected to generate 0.64 times more return on investment than Theriva Biologics. However, Puma Biotechnology is 1.55 times less risky than Theriva Biologics. It trades about 0.01 of its potential returns per unit of risk. Theriva Biologics is currently generating about -0.03 per unit of risk. If you would invest  412.00  in Puma Biotechnology on September 13, 2024 and sell it today you would lose (120.00) from holding Puma Biotechnology or give up 29.13% 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.  Theriva Biologics

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.

Theriva Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Theriva Biologics 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 fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Puma Biotechnology and Theriva Biologics

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

The idea behind Puma Biotechnology and Theriva Biologics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.