Correlation Between Astellas Pharma and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Astellas Pharma and Bayer AG 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 Astellas Pharma and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astellas Pharma and Bayer AG, you can compare the effects of market volatilities on Astellas Pharma and Bayer AG 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 Astellas Pharma with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astellas Pharma and Bayer AG.
Diversification Opportunities for Astellas Pharma and Bayer AG
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Astellas and Bayer is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Astellas Pharma and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Astellas Pharma 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 Astellas Pharma are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Astellas Pharma i.e., Astellas Pharma and Bayer AG go up and down completely randomly.
Pair Corralation between Astellas Pharma and Bayer AG
Assuming the 90 days horizon Astellas Pharma is expected to generate 1.46 times more return on investment than Bayer AG. However, Astellas Pharma is 1.46 times more volatile than Bayer AG. It trades about 0.0 of its potential returns per unit of risk. Bayer AG is currently generating about -0.08 per unit of risk. If you would invest 1,104 in Astellas Pharma on August 26, 2024 and sell it today you would lose (136.00) from holding Astellas Pharma or give up 12.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.96% |
| Values | Daily Returns |
Astellas Pharma vs. Bayer AG
Performance |
| Timeline |
| Astellas Pharma |
| Bayer AG |
Astellas Pharma and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astellas Pharma and Bayer AG
The main advantage of trading using opposite Astellas Pharma and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astellas Pharma position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| Astellas Pharma vs. Sanofi ADR | Astellas Pharma vs. Bristol Myers Squibb | Astellas Pharma vs. AstraZeneca PLC ADR | Astellas Pharma vs. Gilead Sciences |
| Bayer AG vs. Sanofi ADR | Bayer AG vs. Bristol Myers Squibb | Bayer AG vs. AstraZeneca PLC ADR | Bayer AG vs. Gilead Sciences |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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