Correlation Between Amicus Therapeutics and Teva Pharma
Can any of the company-specific risk be diversified away by investing in both Amicus Therapeutics and Teva 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 Amicus Therapeutics and Teva Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amicus Therapeutics and Teva Pharma Industries, you can compare the effects of market volatilities on Amicus Therapeutics and Teva 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 Amicus Therapeutics with a short position of Teva Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amicus Therapeutics and Teva Pharma.
Diversification Opportunities for Amicus Therapeutics and Teva Pharma
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amicus and Teva is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amicus Therapeutics and Teva Pharma Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharma Industries and Amicus Therapeutics 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 Amicus Therapeutics are associated (or correlated) with Teva Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharma Industries has no effect on the direction of Amicus Therapeutics i.e., Amicus Therapeutics and Teva Pharma go up and down completely randomly.
Pair Corralation between Amicus Therapeutics and Teva Pharma
Given the investment horizon of 90 days Amicus Therapeutics is expected to under-perform the Teva Pharma. In addition to that, Amicus Therapeutics is 1.62 times more volatile than Teva Pharma Industries. It trades about -0.03 of its total potential returns per unit of risk. Teva Pharma Industries is currently generating about -0.04 per unit of volatility. If you would invest 1,738 in Teva Pharma Industries on September 3, 2024 and sell it today you would lose (60.00) from holding Teva Pharma Industries or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amicus Therapeutics vs. Teva Pharma Industries
Performance |
| Timeline |
| Amicus Therapeutics |
| Teva Pharma Industries |
Amicus Therapeutics and Teva Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amicus Therapeutics and Teva Pharma
The main advantage of trading using opposite Amicus Therapeutics and Teva Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amicus Therapeutics position performs unexpectedly, Teva 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 Teva Pharma will offset losses from the drop in Teva Pharma's long position.| Amicus Therapeutics vs. Incyte | Amicus Therapeutics vs. Denali Therapeutics | Amicus Therapeutics vs. argenx NV ADR | Amicus Therapeutics vs. Harmony Biosciences Holdings |
| Teva Pharma vs. Connect Biopharma Holdings | Teva Pharma vs. Acumen Pharmaceuticals | Teva Pharma vs. Nuvation Bio | Teva Pharma vs. Eledon Pharmaceuticals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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