Correlation Between Horizon Pharma and Roche Holding
Can any of the company-specific risk be diversified away by investing in both Horizon Pharma and Roche Holding 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 Horizon Pharma and Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Pharma PLC and Roche Holding AG, you can compare the effects of market volatilities on Horizon Pharma and Roche Holding 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 Horizon Pharma with a short position of Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Pharma and Roche Holding.
Diversification Opportunities for Horizon Pharma and Roche Holding
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Horizon and Roche is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Pharma PLC and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG and Horizon Pharma 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 Horizon Pharma PLC are associated (or correlated) with Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of Horizon Pharma i.e., Horizon Pharma and Roche Holding go up and down completely randomly.
Pair Corralation between Horizon Pharma and Roche Holding
Given the investment horizon of 90 days Horizon Pharma PLC is expected to under-perform the Roche Holding. In addition to that, Horizon Pharma is 1.28 times more volatile than Roche Holding AG. It trades about -0.08 of its total potential returns per unit of risk. Roche Holding AG is currently generating about 0.0 per unit of volatility. If you would invest 30,409 in Roche Holding AG on August 29, 2024 and sell it today you would lose (2,108) from holding Roche Holding AG or give up 6.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 13.74% |
| Values | Daily Returns |
Horizon Pharma PLC vs. Roche Holding AG
Performance |
| Timeline |
| Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Roche Holding AG |
Horizon Pharma and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Pharma and Roche Holding
The main advantage of trading using opposite Horizon Pharma and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Pharma position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.| Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
| Roche Holding vs. AstraZeneca PLC | Roche Holding vs. Roche Holding AG | Roche Holding vs. Roche Holding Ltd | Roche Holding vs. Grifols SA ADR |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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