Correlation Between Protagenic Therapeutics and Puma Biotechnology

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

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

Diversification Opportunities for Protagenic Therapeutics and Puma Biotechnology

-0.05

Correlation Coefficient

Protagenic Therapeutics  Puma Biotechnology

Good diversification

The 3 months correlation between Protagenic and Puma is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Protagenic Therapeutics and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and Protagenic 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 Protagenic Therapeutics 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 Protagenic Therapeutics i.e., Protagenic Therapeutics and Puma Biotechnology go up and down completely randomly.

Pair Corralation between Protagenic Therapeutics and Puma Biotechnology

Given the investment horizon of 90 days Protagenic Therapeutics is expected to generate 1.14 times less return on investment than Puma Biotechnology. In addition to that, Protagenic Therapeutics is 1.91 times more volatile than Puma Biotechnology. It trades about 0.03 of its total potential returns per unit of risk. Puma Biotechnology is currently generating about 0.07 per unit of volatility. If you would invest  256.00  in Puma Biotechnology on September 19, 2024 and sell it today you would earn a total of  36.00  from holding Puma Biotechnology or generate 14.06% return on investment over 90 days.

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

Protagenic Therapeutics  vs.  Puma Biotechnology

Protagenic Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Protagenic Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Protagenic Therapeutics 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 Protagenic Therapeutics and Puma Biotechnology

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

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.