Correlation Between Investor and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Investor and AstraZeneca PLC 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 Investor and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investor AB ser and AstraZeneca PLC, you can compare the effects of market volatilities on Investor and AstraZeneca PLC 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 Investor with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and AstraZeneca PLC.
Diversification Opportunities for Investor and AstraZeneca PLC
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Investor and AstraZeneca is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC and Investor 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 Investor AB ser are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Investor i.e., Investor and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Investor and AstraZeneca PLC
Assuming the 90 days trading horizon Investor AB ser is expected to generate 0.38 times more return on investment than AstraZeneca PLC. However, Investor AB ser is 2.62 times less risky than AstraZeneca PLC. It trades about -0.19 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.19 per unit of risk. If you would invest 30,794 in Investor AB ser on August 29, 2024 and sell it today you would lose (1,129) from holding Investor AB ser or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investor AB ser vs. AstraZeneca PLC
Performance |
| Timeline |
| Investor AB ser |
| AstraZeneca PLC |
Investor and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investor and AstraZeneca PLC
The main advantage of trading using opposite Investor and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investor position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Investor vs. Kinnevik Investment AB | Investor vs. Investment AB Latour | Investor vs. Samhllsbyggnadsbolaget i Norden | Investor vs. Industrivarden AB ser |
| AstraZeneca PLC vs. AB Volvo | AstraZeneca PLC vs. Telefonaktiebolaget LM Ericsson | AstraZeneca PLC vs. H M Hennes | AstraZeneca PLC vs. Investor AB ser |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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