Correlation Between Instil Bio and Puma Biotechnology

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

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

Diversification Opportunities for Instil Bio and Puma Biotechnology

-0.7

Correlation Coefficient

Instil Bio  Puma Biotechnology

Excellent diversification

The 3 months correlation between Instil and Puma is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and Puma Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma Biotechnology and Instil Bio 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 Instil Bio 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 Instil Bio i.e., Instil Bio and Puma Biotechnology go up and down completely randomly.

Pair Corralation between Instil Bio and Puma Biotechnology

Considering the 90-day investment horizon Instil Bio is expected to under-perform the Puma Biotechnology. In addition to that, Instil Bio is 1.19 times more volatile than Puma Biotechnology. It trades about -0.22 of its total potential returns per unit of risk. Puma Biotechnology is currently generating about 0.02 per unit of volatility. If you would invest  297.00  in Puma Biotechnology on September 14, 2024 and sell it today you would lose (5.00) from holding Puma Biotechnology or give up 1.68% of portfolio value over 90 days.

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

Instil Bio  vs.  Puma Biotechnology

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 Instil Bio and Puma Biotechnology

The main advantage of trading using opposite Instil Bio and Puma Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Instil Bio 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 Instil Bio 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.