Correlation Between Collegium Pharmaceutical and Silver Spike

Can any of the company-specific risk be diversified away by investing in both Collegium Pharmaceutical and Silver Spike 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 Collegium Pharmaceutical and Silver Spike into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Collegium Pharmaceutical and Silver Spike Investment, you can compare the effects of market volatilities on Collegium Pharmaceutical and Silver Spike 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 Collegium Pharmaceutical with a short position of Silver Spike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collegium Pharmaceutical and Silver Spike.

Diversification Opportunities for Collegium Pharmaceutical and Silver Spike

0.49

Correlation Coefficient

Collegium Pharmaceutical  Silver Spike

Very weak diversification

The 3 months correlation between Collegium and Silver is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Silver Spike Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spike Investment and Collegium Pharmaceutical 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 Collegium Pharmaceutical are associated (or correlated) with Silver Spike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spike Investment has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Silver Spike go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Silver Spike

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 1.17 times more return on investment than Silver Spike. However, Collegium Pharmaceutical is 1.17 times more volatile than Silver Spike Investment. It trades about 0.1 of its potential returns per unit of risk. Silver Spike Investment is currently generating about 0.11 per unit of risk. If you would invest  2,350  in Collegium Pharmaceutical on February 8, 2024 and sell it today you would earn a total of  1,380  from holding Collegium Pharmaceutical or generate 58.72% return on investment over 90 days.

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

Collegium Pharmaceutical  vs.  Silver Spike Investment

Collegium Pharmaceutical

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Collegium Pharmaceutical disclosed solid returns over the last few months and may actually be approaching a breakup point.

Silver Spike Investment

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Spike Investment are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collegium Pharmaceutical and Silver Spike

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

The idea behind Collegium Pharmaceutical and Silver Spike Investment 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.