Correlation Between Guangzhou Baiyunshan and Amneal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Guangzhou Baiyunshan and Amneal Pharmaceuticals 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 Guangzhou Baiyunshan and Amneal Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangzhou Baiyunshan Pharmaceutical and Amneal Pharmaceuticals, you can compare the effects of market volatilities on Guangzhou Baiyunshan and Amneal Pharmaceuticals 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 Guangzhou Baiyunshan with a short position of Amneal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Baiyunshan and Amneal Pharmaceuticals.
Diversification Opportunities for Guangzhou Baiyunshan and Amneal Pharmaceuticals
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangzhou and Amneal is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Baiyunshan Pharmaceu and Amneal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amneal Pharmaceuticals and Guangzhou Baiyunshan 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 Guangzhou Baiyunshan Pharmaceutical are associated (or correlated) with Amneal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amneal Pharmaceuticals has no effect on the direction of Guangzhou Baiyunshan i.e., Guangzhou Baiyunshan and Amneal Pharmaceuticals go up and down completely randomly.
Pair Corralation between Guangzhou Baiyunshan and Amneal Pharmaceuticals
Assuming the 90 days horizon Guangzhou Baiyunshan Pharmaceutical is expected to under-perform the Amneal Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Guangzhou Baiyunshan Pharmaceutical is 1.71 times less risky than Amneal Pharmaceuticals. The stock trades about -0.06 of its potential returns per unit of risk. The Amneal Pharmaceuticals is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 740.00 in Amneal Pharmaceuticals on November 6, 2024 and sell it today you would earn a total of 85.00 from holding Amneal Pharmaceuticals or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Guangzhou Baiyunshan Pharmaceu vs. Amneal Pharmaceuticals
Performance |
| Timeline |
| Guangzhou Baiyunshan |
| Amneal Pharmaceuticals |
Guangzhou Baiyunshan and Amneal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Baiyunshan and Amneal Pharmaceuticals
The main advantage of trading using opposite Guangzhou Baiyunshan and Amneal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Baiyunshan position performs unexpectedly, Amneal Pharmaceuticals 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 Amneal Pharmaceuticals will offset losses from the drop in Amneal Pharmaceuticals' long position.The idea behind Guangzhou Baiyunshan Pharmaceutical and Amneal Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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