Correlation Between EuropaCorp and Astellas Pharma
Can any of the company-specific risk be diversified away by investing in both EuropaCorp and Astellas Pharma 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 EuropaCorp and Astellas Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuropaCorp and Astellas Pharma, you can compare the effects of market volatilities on EuropaCorp and Astellas Pharma 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 EuropaCorp with a short position of Astellas Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuropaCorp and Astellas Pharma.
Diversification Opportunities for EuropaCorp and Astellas Pharma
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EuropaCorp and Astellas is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding EuropaCorp and Astellas Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astellas Pharma and EuropaCorp 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 EuropaCorp are associated (or correlated) with Astellas Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astellas Pharma has no effect on the direction of EuropaCorp i.e., EuropaCorp and Astellas Pharma go up and down completely randomly.
Pair Corralation between EuropaCorp and Astellas Pharma
Assuming the 90 days horizon EuropaCorp is expected to generate 2.43 times more return on investment than Astellas Pharma. However, EuropaCorp is 2.43 times more volatile than Astellas Pharma. It trades about 0.02 of its potential returns per unit of risk. Astellas Pharma is currently generating about -0.03 per unit of risk. If you would invest 53.00 in EuropaCorp on November 27, 2024 and sell it today you would lose (7.00) from holding EuropaCorp or give up 13.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EuropaCorp vs. Astellas Pharma
Performance |
| Timeline |
| EuropaCorp |
| Astellas Pharma |
EuropaCorp and Astellas Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuropaCorp and Astellas Pharma
The main advantage of trading using opposite EuropaCorp and Astellas Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuropaCorp position performs unexpectedly, Astellas Pharma 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 Astellas Pharma will offset losses from the drop in Astellas Pharma's long position.| EuropaCorp vs. Heidelberg Materials AG | EuropaCorp vs. BANKINTER ADR 2007 | EuropaCorp vs. SANOK RUBBER ZY | EuropaCorp vs. CDN IMPERIAL BANK |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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