Correlation Between Bayer AG and Otsuka Holdings
Can any of the company-specific risk be diversified away by investing in both Bayer AG and Otsuka Holdings 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 Bayer AG and Otsuka Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayer AG PK and Otsuka Holdings Co, you can compare the effects of market volatilities on Bayer AG and Otsuka Holdings 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 Bayer AG with a short position of Otsuka Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayer AG and Otsuka Holdings.
Diversification Opportunities for Bayer AG and Otsuka Holdings
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayer and Otsuka is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bayer AG PK and Otsuka Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka Holdings and Bayer AG 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 Bayer AG PK are associated (or correlated) with Otsuka Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka Holdings has no effect on the direction of Bayer AG i.e., Bayer AG and Otsuka Holdings go up and down completely randomly.
Pair Corralation between Bayer AG and Otsuka Holdings
If you would invest 1,686 in Bayer AG PK on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Bayer AG PK or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Bayer AG PK vs. Otsuka Holdings Co
Performance |
| Timeline |
| Bayer AG PK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Otsuka Holdings |
Bayer AG and Otsuka Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayer AG and Otsuka Holdings
The main advantage of trading using opposite Bayer AG and Otsuka Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayer AG position performs unexpectedly, Otsuka Holdings 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 Otsuka Holdings will offset losses from the drop in Otsuka Holdings' long position.| Bayer AG vs. Novartis AG ADR | Bayer AG vs. Sanofi ADR | Bayer AG vs. AstraZeneca PLC ADR | Bayer AG vs. GlaxoSmithKline PLC ADR |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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