Correlation Between PTC Therapeutics and Collegium Pharmaceutical

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

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

Diversification Opportunities for PTC Therapeutics and Collegium Pharmaceutical

0.24

Correlation Coefficient

PTC Therapeutics  Collegium Pharmaceutical

Modest diversification

The 3 months correlation between PTC and Collegium is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PTC Therapeutics and Collegium Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collegium Pharmaceutical and PTC 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 PTC Therapeutics 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 PTC Therapeutics i.e., PTC Therapeutics and Collegium Pharmaceutical go up and down completely randomly.

Pair Corralation between PTC Therapeutics and Collegium Pharmaceutical

Given the investment horizon of 90 days PTC Therapeutics is expected to generate 1.68 times more return on investment than Collegium Pharmaceutical. However, PTC Therapeutics is 1.68 times more volatile than Collegium Pharmaceutical. It trades about 0.22 of its potential returns per unit of risk. Collegium Pharmaceutical is currently generating about 0.11 per unit of risk. If you would invest  3,619  in PTC Therapeutics on May 6, 2025 and sell it today you would earn a total of  1,594  from holding PTC Therapeutics or generate 44.05% return on investment over 90 days.

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

PTC Therapeutics  vs.  Collegium Pharmaceutical

PTC Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Therapeutics are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, PTC Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Collegium Pharmaceutical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Collegium Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with PTC Therapeutics and Collegium Pharmaceutical

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

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.