Correlation Between Sam A and Withuspharmaceutical
Can any of the company-specific risk be diversified away by investing in both Sam A and Withuspharmaceutical 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 Sam A and Withuspharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam A Pharm Co and Withuspharmaceutical CoLtd, you can compare the effects of market volatilities on Sam A and Withuspharmaceutical 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 Sam A with a short position of Withuspharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam A and Withuspharmaceutical.
Diversification Opportunities for Sam A and Withuspharmaceutical
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sam and Withuspharmaceutical is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sam A Pharm Co and Withuspharmaceutical CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Withuspharmaceutical and Sam A 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 Sam A Pharm Co are associated (or correlated) with Withuspharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Withuspharmaceutical has no effect on the direction of Sam A i.e., Sam A and Withuspharmaceutical go up and down completely randomly.
Pair Corralation between Sam A and Withuspharmaceutical
Assuming the 90 days trading horizon Sam A Pharm Co is expected to under-perform the Withuspharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Sam A Pharm Co is 1.13 times less risky than Withuspharmaceutical. The stock trades about -0.45 of its potential returns per unit of risk. The Withuspharmaceutical CoLtd is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 711,000 in Withuspharmaceutical CoLtd on August 28, 2024 and sell it today you would lose (41,000) from holding Withuspharmaceutical CoLtd or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam A Pharm Co vs. Withuspharmaceutical CoLtd
Performance |
| Timeline |
| Sam A Pharm |
| Withuspharmaceutical |
Sam A and Withuspharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam A and Withuspharmaceutical
The main advantage of trading using opposite Sam A and Withuspharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam A position performs unexpectedly, Withuspharmaceutical 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 Withuspharmaceutical will offset losses from the drop in Withuspharmaceutical's long position.| Sam A vs. Kolon Life Science | Sam A vs. Aminologics CoLtd | Sam A vs. Withuspharmaceutical CoLtd | Sam A vs. High Tech Pharm |
| Withuspharmaceutical vs. Kolon Life Science | Withuspharmaceutical vs. Aminologics CoLtd | Withuspharmaceutical vs. High Tech Pharm |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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