Correlation Between Otsuka Holdings and Novartis
Can any of the company-specific risk be diversified away by investing in both Otsuka Holdings and Novartis 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 Otsuka Holdings and Novartis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otsuka Holdings Co and Novartis AG, you can compare the effects of market volatilities on Otsuka Holdings and Novartis 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 Otsuka Holdings with a short position of Novartis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otsuka Holdings and Novartis.
Diversification Opportunities for Otsuka Holdings and Novartis
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Otsuka and Novartis is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Otsuka Holdings Co and Novartis AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novartis AG and Otsuka Holdings 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 Otsuka Holdings Co are associated (or correlated) with Novartis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novartis AG has no effect on the direction of Otsuka Holdings i.e., Otsuka Holdings and Novartis go up and down completely randomly.
Pair Corralation between Otsuka Holdings and Novartis
Assuming the 90 days horizon Otsuka Holdings Co is expected to generate 0.7 times more return on investment than Novartis. However, Otsuka Holdings Co is 1.42 times less risky than Novartis. It trades about 0.05 of its potential returns per unit of risk. Novartis AG is currently generating about 0.02 per unit of risk. If you would invest 3,149 in Otsuka Holdings Co on August 23, 2024 and sell it today you would earn a total of 799.00 from holding Otsuka Holdings Co or generate 25.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 66.37% |
| Values | Daily Returns |
Otsuka Holdings Co vs. Novartis AG
Performance |
| Timeline |
| Otsuka Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Novartis AG |
Otsuka Holdings and Novartis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otsuka Holdings and Novartis
The main advantage of trading using opposite Otsuka Holdings and Novartis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otsuka Holdings position performs unexpectedly, Novartis 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 Novartis will offset losses from the drop in Novartis' long position.| Otsuka Holdings vs. Astellas Pharma | Otsuka Holdings vs. Sanofi ADR | Otsuka Holdings vs. Novartis AG ADR | Otsuka Holdings vs. Biogen Inc |
| Novartis vs. Ono Pharmaceutical Co | Novartis vs. GSK plc | Novartis vs. Grifols SA ADR | Novartis vs. Pfizer Inc |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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