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
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Danaher and WuXi is -0.34. 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
Considering the 90-day investment horizon Danaher is expected to generate 1.58 times less return on investment than WuXi AppTec. But when comparing it to its historical volatility, Danaher is 2.89 times less risky than WuXi AppTec. It trades about 0.01 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 920.00 in WuXi AppTec Co on September 3, 2024 and sell it today you would lose (297.00) from holding WuXi AppTec Co or give up 32.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| 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. Agilent Technologies | Danaher vs. Illumina | Danaher vs. IDEXX Laboratories | Danaher vs. Waters |
| WuXi AppTec vs. Neuronetics | WuXi AppTec vs. Intelligent Bio Solutions | WuXi AppTec vs. Biodesix | WuXi AppTec vs. Precipio |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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