Correlation Between Luye Pharma and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Luye Pharma 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 Luye Pharma and AstraZeneca PLC 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 AstraZeneca PLC, you can compare the effects of market volatilities on Luye Pharma 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 Luye Pharma with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luye Pharma and AstraZeneca PLC.
Diversification Opportunities for Luye Pharma and AstraZeneca PLC
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Luye and AstraZeneca is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Luye Pharma Group and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC 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 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 Luye Pharma i.e., Luye Pharma and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Luye Pharma and AstraZeneca PLC
If you would invest 13,188 in AstraZeneca PLC on November 8, 2024 and sell it today you would earn a total of 1,962 from holding AstraZeneca PLC or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luye Pharma Group vs. AstraZeneca PLC
Performance |
| Timeline |
| Luye Pharma Group |
| AstraZeneca PLC |
Luye Pharma and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luye Pharma and AstraZeneca PLC
The main advantage of trading using opposite Luye Pharma and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luye Pharma 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.| Luye Pharma vs. Novartis AG ADR | Luye Pharma vs. AstraZeneca PLC ADR | Luye Pharma vs. GlaxoSmithKline PLC ADR | Luye Pharma vs. Roche Holding Ltd |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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