Correlation Between Swedish Orphan and Teva Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Swedish Orphan and Teva Pharmaceutical 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 Swedish Orphan and Teva Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swedish Orphan Biovitrum and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Swedish Orphan and Teva Pharmaceutical 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 Swedish Orphan with a short position of Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swedish Orphan and Teva Pharmaceutical.
Diversification Opportunities for Swedish Orphan and Teva Pharmaceutical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Swedish and Teva is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Orphan Biovitrum and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical and Swedish Orphan 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 Swedish Orphan Biovitrum are associated (or correlated) with Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Swedish Orphan i.e., Swedish Orphan and Teva Pharmaceutical go up and down completely randomly.
Pair Corralation between Swedish Orphan and Teva Pharmaceutical
Assuming the 90 days horizon Swedish Orphan Biovitrum is expected to under-perform the Teva Pharmaceutical. But the stock apears to be less risky and, when comparing its historical volatility, Swedish Orphan Biovitrum is 3.95 times less risky than Teva Pharmaceutical. The stock trades about -0.07 of its potential returns per unit of risk. The Teva Pharmaceutical Industries is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Teva Pharmaceutical Industries on October 15, 2024 and sell it today you would earn a total of 430.00 from holding Teva Pharmaceutical Industries or generate 26.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swedish Orphan Biovitrum vs. Teva Pharmaceutical Industries
Performance |
| Timeline |
| Swedish Orphan Biovitrum |
| Teva Pharmaceutical |
Swedish Orphan and Teva Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swedish Orphan and Teva Pharmaceutical
The main advantage of trading using opposite Swedish Orphan and Teva Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedish Orphan position performs unexpectedly, Teva Pharmaceutical 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 Teva Pharmaceutical will offset losses from the drop in Teva Pharmaceutical's long position.| Swedish Orphan vs. PURETECH HEALTH PLC | Swedish Orphan vs. SOGECLAIR SA INH | Swedish Orphan vs. EPSILON HEALTHCARE LTD | Swedish Orphan vs. DELTA AIR LINES |
| Teva Pharmaceutical vs. GWILLI FOOD | Teva Pharmaceutical vs. United Natural Foods | Teva Pharmaceutical vs. Tyson Foods | Teva Pharmaceutical vs. MTY Food Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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