Correlation Between Biogen and Astellas Pharma
Can any of the company-specific risk be diversified away by investing in both Biogen 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 Biogen and Astellas Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Astellas Pharma, you can compare the effects of market volatilities on Biogen 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 Biogen with a short position of Astellas Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Astellas Pharma.
Diversification Opportunities for Biogen and Astellas Pharma
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Biogen and Astellas is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Astellas Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astellas Pharma and Biogen 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 Biogen Inc 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 Biogen i.e., Biogen and Astellas Pharma go up and down completely randomly.
Pair Corralation between Biogen and Astellas Pharma
Given the investment horizon of 90 days Biogen Inc is expected to under-perform the Astellas Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Biogen Inc is 1.71 times less risky than Astellas Pharma. The stock trades about -0.55 of its potential returns per unit of risk. The Astellas Pharma is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 1,128 in Astellas Pharma on August 28, 2024 and sell it today you would lose (119.00) from holding Astellas Pharma or give up 10.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Astellas Pharma
Performance |
| Timeline |
| Biogen Inc |
| Astellas Pharma |
Biogen and Astellas Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Astellas Pharma
The main advantage of trading using opposite Biogen and Astellas Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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.| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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