Correlation Between Berkshire Hathaway and Santen Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Santen 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 Berkshire Hathaway and Santen Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Santen Pharmaceutical Co, you can compare the effects of market volatilities on Berkshire Hathaway and Santen 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 Berkshire Hathaway with a short position of Santen Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Santen Pharmaceutical.
Diversification Opportunities for Berkshire Hathaway and Santen Pharmaceutical
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Santen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Santen Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santen Pharmaceutical and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Santen Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santen Pharmaceutical has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Santen Pharmaceutical go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Santen Pharmaceutical
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.33 times more return on investment than Santen Pharmaceutical. However, Berkshire Hathaway is 3.04 times less risky than Santen Pharmaceutical. It trades about 0.12 of its potential returns per unit of risk. Santen Pharmaceutical Co is currently generating about 0.02 per unit of risk. If you would invest 33,529 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 14,773 from holding Berkshire Hathaway or generate 44.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 60.48% |
| Values | Daily Returns |
Berkshire Hathaway vs. Santen Pharmaceutical Co
Performance |
| Timeline |
| Berkshire Hathaway |
| Santen Pharmaceutical |
Berkshire Hathaway and Santen Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Santen Pharmaceutical
The main advantage of trading using opposite Berkshire Hathaway and Santen Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Santen 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 Santen Pharmaceutical will offset losses from the drop in Santen Pharmaceutical's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
| Santen Pharmaceutical vs. Ono Pharmaceutical Co | Santen Pharmaceutical vs. GSK plc | Santen Pharmaceutical vs. Grifols SA ADR | Santen Pharmaceutical vs. Pfizer Inc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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