Correlation Between APPLIED MATERIALS and WUXI BIOLOGICS
Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and WUXI BIOLOGICS 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 WUXI BIOLOGICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on APPLIED MATERIALS and WUXI BIOLOGICS 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 WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and WUXI BIOLOGICS.
Diversification Opportunities for APPLIED MATERIALS and WUXI BIOLOGICS
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between APPLIED and WUXI is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 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 WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and WUXI BIOLOGICS go up and down completely randomly.
Pair Corralation between APPLIED MATERIALS and WUXI BIOLOGICS
Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.55 times more return on investment than WUXI BIOLOGICS. However, APPLIED MATERIALS is 1.82 times less risky than WUXI BIOLOGICS. It trades about 0.06 of its potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about -0.02 per unit of risk. If you would invest 8,864 in APPLIED MATERIALS on September 13, 2024 and sell it today you would earn a total of 7,412 from holding APPLIED MATERIALS or generate 83.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APPLIED MATERIALS vs. WUXI BIOLOGICS UNSPADR2
Performance |
| Timeline |
| APPLIED MATERIALS |
| WUXI BIOLOGICS UNSPADR2 |
APPLIED MATERIALS and WUXI BIOLOGICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APPLIED MATERIALS and WUXI BIOLOGICS
The main advantage of trading using opposite APPLIED MATERIALS and WUXI BIOLOGICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, WUXI BIOLOGICS 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 WUXI BIOLOGICS will offset losses from the drop in WUXI BIOLOGICS's long position.| APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc | APPLIED MATERIALS vs. Apple Inc |
| WUXI BIOLOGICS vs. Avanos Medical | WUXI BIOLOGICS vs. Microbot Medical | WUXI BIOLOGICS vs. APPLIED MATERIALS | WUXI BIOLOGICS vs. MeVis Medical Solutions |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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