Correlation Between Pacira Pharmaceuticals and Deciphera Pharmaceuticals

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

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

Diversification Opportunities for Pacira Pharmaceuticals and Deciphera Pharmaceuticals

-0.17

Correlation Coefficient

Pacira Pharmaceuticals  Deciphera Pharmaceuticals

Good diversification

The 3 months correlation between Pacira and Deciphera is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pacira Pharmaceuticals and Deciphera Pharmaceuticals LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deciphera Pharmaceuticals and Pacira Pharmaceuticals 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 Pacira Pharmaceuticals are associated (or correlated) with Deciphera Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deciphera Pharmaceuticals has no effect on the direction of Pacira Pharmaceuticals i.e., Pacira Pharmaceuticals and Deciphera Pharmaceuticals go up and down completely randomly.

Pair Corralation between Pacira Pharmaceuticals and Deciphera Pharmaceuticals

Given the investment horizon of 90 days Pacira Pharmaceuticals is expected to under-perform the Deciphera Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Pacira Pharmaceuticals is 6.58 times less risky than Deciphera Pharmaceuticals. The stock trades about -0.21 of its potential returns per unit of risk. The Deciphera Pharmaceuticals LLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,654  in Deciphera Pharmaceuticals LLC on February 8, 2024 and sell it today you would earn a total of  884.00  from holding Deciphera Pharmaceuticals LLC or generate 53.45% return on investment over 90 days.

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

Pacira Pharmaceuticals  vs.  Deciphera Pharmaceuticals LLC

Pacira Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacira Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Pacira Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Deciphera Pharmaceuticals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deciphera Pharmaceuticals LLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Deciphera Pharmaceuticals demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacira Pharmaceuticals and Deciphera Pharmaceuticals

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

The idea behind Pacira Pharmaceuticals and Deciphera Pharmaceuticals LLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.