Correlation Between Regencell Bioscience and Collegium Pharmaceutical

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

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

Diversification Opportunities for Regencell Bioscience and Collegium Pharmaceutical

-0.55

Correlation Coefficient

Regencell Bioscience  Collegium Pharmaceutical

Excellent diversification

The 3 months correlation between Regencell and Collegium is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Regencell Bioscience Holdings and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical and Regencell Bioscience 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 Regencell Bioscience Holdings are associated (or correlated) with Collegium Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collegium Pharmaceutical has no effect on the direction of Regencell Bioscience i.e., Regencell Bioscience and Collegium Pharmaceutical go up and down completely randomly.

Pair Corralation between Regencell Bioscience and Collegium Pharmaceutical

Considering the 90-day investment horizon Regencell Bioscience Holdings is expected to under-perform the Collegium Pharmaceutical. In addition to that, Regencell Bioscience is 3.08 times more volatile than Collegium Pharmaceutical. It trades about -0.02 of its total potential returns per unit of risk. Collegium Pharmaceutical is currently generating about 0.02 per unit of volatility. If you would invest  3,208  in Collegium Pharmaceutical on February 18, 2024 and sell it today you would earn a total of  39.00  from holding Collegium Pharmaceutical or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Regencell Bioscience Holdings  vs.  Collegium Pharmaceutical

Regencell Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regencell Bioscience Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Collegium Pharmaceutical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Collegium Pharmaceutical is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Regencell Bioscience and Collegium Pharmaceutical

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

The idea behind Regencell Bioscience Holdings and Collegium Pharmaceutical 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.