Correlation Between Danaher and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both Danaher and WuXi AppTec 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 Danaher and WuXi AppTec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaher and WuXi AppTec Co, you can compare the effects of market volatilities on Danaher and WuXi AppTec 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 Danaher with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and WuXi AppTec.
Diversification Opportunities for Danaher and WuXi AppTec
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Danaher and WuXi is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and Danaher 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 Danaher are associated (or correlated) with WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of Danaher i.e., Danaher and WuXi AppTec go up and down completely randomly.
Pair Corralation between Danaher and WuXi AppTec
Assuming the 90 days trading horizon Danaher is expected to generate 0.35 times more return on investment than WuXi AppTec. However, Danaher is 2.85 times less risky than WuXi AppTec. It trades about 0.28 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.05 per unit of risk. If you would invest 21,948 in Danaher on October 20, 2024 and sell it today you would earn a total of 1,382 from holding Danaher or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Danaher vs. WuXi AppTec Co
Performance |
| Timeline |
| Danaher |
| WuXi AppTec |
Danaher and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaher and WuXi AppTec
The main advantage of trading using opposite Danaher and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.| Danaher vs. WuXi AppTec Co | Danaher vs. Danaher | Danaher vs. SIEMENS HEALTH ADR050 | Danaher vs. Siemens Healthineers AG |
| WuXi AppTec vs. COSMOSTEEL HLDGS | WuXi AppTec vs. Sumitomo Rubber Industries | WuXi AppTec vs. Goodyear Tire Rubber | WuXi AppTec vs. VULCAN MATERIALS |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |