Correlation Between AstraZeneca PLC and Astellas Pharma
Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC 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 AstraZeneca PLC and Astellas Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and Astellas Pharma, you can compare the effects of market volatilities on AstraZeneca PLC 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 AstraZeneca PLC with a short position of Astellas Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Astellas Pharma.
Diversification Opportunities for AstraZeneca PLC and Astellas Pharma
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AstraZeneca and Astellas is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Astellas Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astellas Pharma 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 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 AstraZeneca PLC i.e., AstraZeneca PLC and Astellas Pharma go up and down completely randomly.
Pair Corralation between AstraZeneca PLC and Astellas Pharma
Assuming the 90 days horizon AstraZeneca PLC is expected to generate 0.67 times more return on investment than Astellas Pharma. However, AstraZeneca PLC is 1.49 times less risky than Astellas Pharma. It trades about 0.03 of its potential returns per unit of risk. Astellas Pharma is currently generating about -0.01 per unit of risk. If you would invest 12,230 in AstraZeneca PLC on August 27, 2024 and sell it today you would earn a total of 1,163 from holding AstraZeneca PLC or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.92% |
| Values | Daily Returns |
AstraZeneca PLC vs. Astellas Pharma
Performance |
| Timeline |
| AstraZeneca PLC |
| Astellas Pharma |
AstraZeneca PLC and Astellas Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AstraZeneca PLC and Astellas Pharma
The main advantage of trading using opposite AstraZeneca PLC and Astellas Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC 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.| AstraZeneca PLC vs. Sanofi ADR | AstraZeneca PLC vs. Bristol Myers Squibb | AstraZeneca PLC vs. AstraZeneca PLC ADR | AstraZeneca PLC vs. Gilead Sciences |
| Astellas Pharma vs. Sanofi ADR | Astellas Pharma vs. Bristol Myers Squibb | Astellas Pharma vs. AstraZeneca PLC ADR | Astellas Pharma 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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