Correlation Between NYSE Composite and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and WuXi AppTec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and WuXi AppTec Co, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and WuXi AppTec.
Diversification Opportunities for NYSE Composite and WuXi AppTec
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and WuXi is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and WuXi AppTec go up and down completely randomly.
Pair Corralation between NYSE Composite and WuXi AppTec
Assuming the 90 days trading horizon NYSE Composite is expected to generate 14.26 times less return on investment than WuXi AppTec. But when comparing it to its historical volatility, NYSE Composite is 11.21 times less risky than WuXi AppTec. It trades about 0.13 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 469.00 in WuXi AppTec Co on September 12, 2024 and sell it today you would earn a total of 343.00 from holding WuXi AppTec Co or generate 73.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. WuXi AppTec Co
Performance |
| Timeline |
NYSE Composite and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
WuXi AppTec Co
Pair trading matchups for WuXi AppTec
Pair Trading with NYSE Composite and WuXi AppTec
The main advantage of trading using opposite NYSE Composite and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Teleflex Incorporated | NYSE Composite vs. Victorias Secret Co | NYSE Composite vs. Under Armour C | NYSE Composite vs. Steven Madden |
| WuXi AppTec vs. Mettler Toledo International | WuXi AppTec vs. ICON PLC | WuXi AppTec vs. IQVIA Holdings | WuXi AppTec vs. Charles River Laboratories |
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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