Correlation Between Luye Pharma and Astellas Pharma
Can any of the company-specific risk be diversified away by investing in both Luye Pharma and Astellas Pharma 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 Luye Pharma and Astellas Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Luye Pharma Group and Astellas Pharma, you can compare the effects of market volatilities on Luye Pharma and Astellas Pharma 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 Luye Pharma with a short position of Astellas Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luye Pharma and Astellas Pharma.
Diversification Opportunities for Luye Pharma and Astellas Pharma
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luye and Astellas is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Luye Pharma Group and Astellas Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astellas Pharma and Luye 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 Luye Pharma Group are associated (or correlated) with Astellas Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astellas Pharma has no effect on the direction of Luye Pharma i.e., Luye Pharma and Astellas Pharma go up and down completely randomly.
Pair Corralation between Luye Pharma and Astellas Pharma
Assuming the 90 days horizon Luye Pharma Group is expected to generate 0.53 times more return on investment than Astellas Pharma. However, Luye Pharma Group is 1.89 times less risky than Astellas Pharma. It trades about 0.21 of its potential returns per unit of risk. Astellas Pharma is currently generating about -0.23 per unit of risk. If you would invest 31.00 in Luye Pharma Group on August 24, 2024 and sell it today you would earn a total of 3.00 from holding Luye Pharma Group or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luye Pharma Group vs. Astellas Pharma
Performance |
| Timeline |
| Luye Pharma Group |
| Astellas Pharma |
Luye Pharma and Astellas Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luye Pharma and Astellas Pharma
The main advantage of trading using opposite Luye Pharma and Astellas Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luye Pharma position performs unexpectedly, Astellas Pharma 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 Astellas Pharma will offset losses from the drop in Astellas Pharma's long position.| Luye Pharma vs. Astellas Pharma | Luye Pharma vs. Sanofi ADR | Luye Pharma vs. Amarin PLC | Luye Pharma vs. Novartis AG ADR |
| Astellas Pharma vs. Sanofi ADR | Astellas Pharma vs. Bristol Myers Squibb | Astellas Pharma vs. AstraZeneca PLC ADR | Astellas Pharma vs. Gilead Sciences |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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