Correlation Between IDEXX Laboratories and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both IDEXX Laboratories and WuXi AppTec 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 IDEXX Laboratories and WuXi AppTec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEXX Laboratories and WuXi AppTec Co, you can compare the effects of market volatilities on IDEXX Laboratories and WuXi AppTec 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 IDEXX Laboratories with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEXX Laboratories and WuXi AppTec.
Diversification Opportunities for IDEXX Laboratories and WuXi AppTec
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IDEXX and WuXi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding IDEXX Laboratories and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and IDEXX Laboratories 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 IDEXX Laboratories are associated (or correlated) with WuXi AppTec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi AppTec has no effect on the direction of IDEXX Laboratories i.e., IDEXX Laboratories and WuXi AppTec go up and down completely randomly.
Pair Corralation between IDEXX Laboratories and WuXi AppTec
Assuming the 90 days horizon IDEXX Laboratories is expected to under-perform the WuXi AppTec. But the stock apears to be less risky and, when comparing its historical volatility, IDEXX Laboratories is 3.78 times less risky than WuXi AppTec. The stock trades about -0.08 of its potential returns per unit of risk. The WuXi AppTec Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 437.00 in WuXi AppTec Co on September 1, 2024 and sell it today you would earn a total of 118.00 from holding WuXi AppTec Co or generate 27.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDEXX Laboratories vs. WuXi AppTec Co
Performance |
| Timeline |
| IDEXX Laboratories |
| WuXi AppTec |
IDEXX Laboratories and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDEXX Laboratories and WuXi AppTec
The main advantage of trading using opposite IDEXX Laboratories and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEXX Laboratories position performs unexpectedly, WuXi AppTec 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 WuXi AppTec will offset losses from the drop in WuXi AppTec's long position.| IDEXX Laboratories vs. BOSTON BEER A | IDEXX Laboratories vs. Take Two Interactive Software | IDEXX Laboratories vs. MOLSON RS BEVERAGE | IDEXX Laboratories vs. Magic Software Enterprises |
| WuXi AppTec vs. Danaher | WuXi AppTec vs. Danaher | WuXi AppTec vs. SIEMENS HEALTH ADR050 | WuXi AppTec vs. DexCom Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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