Correlation Between Hoya Corp and West Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Hoya Corp and West 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 Hoya Corp and West Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hoya Corp and West Pharmaceutical Services, you can compare the effects of market volatilities on Hoya Corp and West 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 Hoya Corp with a short position of West Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoya Corp and West Pharmaceutical.
Diversification Opportunities for Hoya Corp and West Pharmaceutical
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hoya and West is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hoya Corp and West Pharmaceutical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Pharmaceutical and Hoya Corp 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 Hoya Corp are associated (or correlated) with West Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Pharmaceutical has no effect on the direction of Hoya Corp i.e., Hoya Corp and West Pharmaceutical go up and down completely randomly.
Pair Corralation between Hoya Corp and West Pharmaceutical
Assuming the 90 days horizon Hoya Corp is expected to generate 0.86 times more return on investment than West Pharmaceutical. However, Hoya Corp is 1.16 times less risky than West Pharmaceutical. It trades about 0.02 of its potential returns per unit of risk. West Pharmaceutical Services is currently generating about 0.0 per unit of risk. If you would invest 12,388 in Hoya Corp on August 31, 2024 and sell it today you would earn a total of 502.00 from holding Hoya Corp or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hoya Corp vs. West Pharmaceutical Services
Performance |
| Timeline |
| Hoya Corp |
| West Pharmaceutical |
Hoya Corp and West Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoya Corp and West Pharmaceutical
The main advantage of trading using opposite Hoya Corp and West Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoya Corp position performs unexpectedly, West 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 West Pharmaceutical will offset losses from the drop in West Pharmaceutical's long position.| Hoya Corp vs. Sysmex Corp | Hoya Corp vs. Straumann Holding AG | Hoya Corp vs. Coloplast AS | Hoya Corp vs. Essilor International SA |
| West Pharmaceutical vs. Teleflex Incorporated | West Pharmaceutical vs. Alcon AG | West Pharmaceutical vs. ResMed Inc | West Pharmaceutical vs. ICU Medical |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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