Correlation Between AstraZeneca PLC and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and Tetragon Financial 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 AstraZeneca PLC and Tetragon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and Tetragon Financial Group, you can compare the effects of market volatilities on AstraZeneca PLC and Tetragon Financial 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 AstraZeneca PLC with a short position of Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Tetragon Financial.
Diversification Opportunities for AstraZeneca PLC and Tetragon Financial
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AstraZeneca and Tetragon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Tetragon Financial go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and Tetragon Financial
Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 3.35 times more return on investment than Tetragon Financial. However, AstraZeneca PLC is 3.35 times more volatile than Tetragon Financial Group. It trades about -0.01 of its potential returns per unit of risk. Tetragon Financial Group is currently generating about -0.2 per unit of risk. If you would invest 1,070,200 in AstraZeneca PLC on October 10, 2024 and sell it today you would lose (3,400) from holding AstraZeneca PLC or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AstraZeneca PLC vs. Tetragon Financial Group
Performance |
| Timeline |
| AstraZeneca PLC |
| Tetragon Financial |
AstraZeneca PLC and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and Tetragon Financial
The main advantage of trading using opposite AstraZeneca PLC and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| AstraZeneca PLC vs. Prosiebensat 1 Media | AstraZeneca PLC vs. Liberty Media Corp | AstraZeneca PLC vs. Grand Vision Media | AstraZeneca PLC vs. Intermediate Capital Group |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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