Correlation Between Laboratory and Amarin PLC
Can any of the company-specific risk be diversified away by investing in both Laboratory and Amarin 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 Laboratory and Amarin PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Amarin PLC, you can compare the effects of market volatilities on Laboratory and Amarin 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 Laboratory with a short position of Amarin PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Amarin PLC.
Diversification Opportunities for Laboratory and Amarin PLC
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Laboratory and Amarin is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Amarin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarin PLC and Laboratory 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 Laboratory of are associated (or correlated) with Amarin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarin PLC has no effect on the direction of Laboratory i.e., Laboratory and Amarin PLC go up and down completely randomly.
Pair Corralation between Laboratory and Amarin PLC
Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.31 times more return on investment than Amarin PLC. However, Laboratory of is 3.21 times less risky than Amarin PLC. It trades about 0.19 of its potential returns per unit of risk. Amarin PLC is currently generating about -0.24 per unit of risk. If you would invest 22,670 in Laboratory of on August 29, 2024 and sell it today you would earn a total of 1,203 from holding Laboratory of or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laboratory of vs. Amarin PLC
Performance |
| Timeline |
| Laboratory |
| Amarin PLC |
Laboratory and Amarin PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laboratory and Amarin PLC
The main advantage of trading using opposite Laboratory and Amarin PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Amarin 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 Amarin PLC will offset losses from the drop in Amarin PLC's long position.| Laboratory vs. Quest Diagnostics Incorporated | Laboratory vs. Waters | Laboratory vs. Universal Health Services | Laboratory vs. Humana Inc |
| Amarin PLC vs. Scilex Holding | Amarin PLC vs. Biogen Inc | Amarin PLC vs. Gilead Sciences | Amarin PLC vs. AstraZeneca PLC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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