Correlation Between Luye Pharma and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Luye Pharma and Bayer AG 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 Bayer AG 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 Bayer AG, you can compare the effects of market volatilities on Luye Pharma and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luye Pharma and Bayer AG.
Diversification Opportunities for Luye Pharma and Bayer AG
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Luye and Bayer is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Luye Pharma Group and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG 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 Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Luye Pharma i.e., Luye Pharma and Bayer AG go up and down completely randomly.
Pair Corralation between Luye Pharma and Bayer AG
If you would invest 2,078 in Bayer AG on November 8, 2024 and sell it today you would earn a total of 112.00 from holding Bayer AG or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Luye Pharma Group vs. Bayer AG
Performance |
| Timeline |
| Luye Pharma Group |
| Bayer AG |
Luye Pharma and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Luye Pharma and Bayer AG
The main advantage of trading using opposite Luye Pharma and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Luye Pharma position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG'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 |
| Bayer AG vs. RadNet Inc | Bayer AG vs. Merit Medical Systems | Bayer AG vs. Ardelyx | Bayer AG vs. Sonida Senior Living |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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