Correlation Between Applied Materials and ImmuPharma PLC
Can any of the company-specific risk be diversified away by investing in both Applied Materials and ImmuPharma PLC 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 Applied Materials and ImmuPharma PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Materials and ImmuPharma PLC, you can compare the effects of market volatilities on Applied Materials and ImmuPharma PLC 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 Applied Materials with a short position of ImmuPharma PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Materials and ImmuPharma PLC.
Diversification Opportunities for Applied Materials and ImmuPharma PLC
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and ImmuPharma is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and ImmuPharma PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ImmuPharma PLC and Applied Materials 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 Applied Materials are associated (or correlated) with ImmuPharma PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ImmuPharma PLC has no effect on the direction of Applied Materials i.e., Applied Materials and ImmuPharma PLC go up and down completely randomly.
Pair Corralation between Applied Materials and ImmuPharma PLC
Assuming the 90 days trading horizon Applied Materials is expected to generate 15.58 times less return on investment than ImmuPharma PLC. But when comparing it to its historical volatility, Applied Materials is 16.97 times less risky than ImmuPharma PLC. It trades about 0.27 of its potential returns per unit of risk. ImmuPharma PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 123.00 in ImmuPharma PLC on October 27, 2024 and sell it today you would earn a total of 282.00 from holding ImmuPharma PLC or generate 229.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Materials vs. ImmuPharma PLC
Performance |
| Timeline |
| Applied Materials |
| ImmuPharma PLC |
Applied Materials and ImmuPharma PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Materials and ImmuPharma PLC
The main advantage of trading using opposite Applied Materials and ImmuPharma PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials position performs unexpectedly, ImmuPharma PLC 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 ImmuPharma PLC will offset losses from the drop in ImmuPharma PLC's long position.| Applied Materials vs. Auto Trader Group | Applied Materials vs. Samsung Electronics Co | Applied Materials vs. Extra Space Storage | Applied Materials vs. Naked Wines plc |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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