Correlation Between Astellas Pharma and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Astellas Pharma and AstraZeneca 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 Astellas Pharma and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astellas Pharma and AstraZeneca PLC, you can compare the effects of market volatilities on Astellas Pharma and AstraZeneca 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 Astellas Pharma with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astellas Pharma and AstraZeneca PLC.
Diversification Opportunities for Astellas Pharma and AstraZeneca PLC
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Astellas and AstraZeneca is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Astellas Pharma and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Astellas Pharma i.e., Astellas Pharma and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Astellas Pharma and AstraZeneca PLC
Assuming the 90 days horizon Astellas Pharma is expected to under-perform the AstraZeneca PLC. But the pink sheet apears to be less risky and, when comparing its historical volatility, Astellas Pharma is 1.36 times less risky than AstraZeneca PLC. The pink sheet trades about -0.04 of its potential returns per unit of risk. The AstraZeneca PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12,573 in AstraZeneca PLC on August 26, 2024 and sell it today you would earn a total of 820.00 from holding AstraZeneca PLC or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astellas Pharma vs. AstraZeneca PLC
Performance |
| Timeline |
| Astellas Pharma |
| AstraZeneca PLC |
Astellas Pharma and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astellas Pharma and AstraZeneca PLC
The main advantage of trading using opposite Astellas Pharma and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astellas Pharma position performs unexpectedly, AstraZeneca 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Astellas Pharma vs. Bristol Myers Squibb | Astellas Pharma vs. Bayer AG | Astellas Pharma vs. Daiichi Sankyo | Astellas Pharma vs. AstraZeneca 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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