Correlation Between Roche Holding and Luye Pharma
Can any of the company-specific risk be diversified away by investing in both Roche Holding and Luye 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 Roche Holding and Luye Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roche Holding AG and Luye Pharma Group, you can compare the effects of market volatilities on Roche Holding and Luye 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 Roche Holding with a short position of Luye Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roche Holding and Luye Pharma.
Diversification Opportunities for Roche Holding and Luye Pharma
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Roche and Luye is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Roche Holding AG and Luye Pharma Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luye Pharma Group and Roche Holding 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 Roche Holding AG are associated (or correlated) with Luye Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luye Pharma Group has no effect on the direction of Roche Holding i.e., Roche Holding and Luye Pharma go up and down completely randomly.
Pair Corralation between Roche Holding and Luye Pharma
If you would invest 28,961 in Roche Holding AG on November 9, 2024 and sell it today you would earn a total of 3,103 from holding Roche Holding AG or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roche Holding AG vs. Luye Pharma Group
Performance |
| Timeline |
| Roche Holding AG |
| Luye Pharma Group |
Roche Holding and Luye Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roche Holding and Luye Pharma
The main advantage of trading using opposite Roche Holding and Luye Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roche Holding position performs unexpectedly, Luye 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 Luye Pharma will offset losses from the drop in Luye Pharma's long position.| Roche Holding vs. AstraZeneca PLC | Roche Holding vs. Roche Holding AG | Roche Holding vs. Roche Holding Ltd | Roche Holding vs. Grifols SA ADR |
| Luye Pharma vs. Astellas Pharma | Luye Pharma vs. Sanofi ADR | Luye Pharma vs. Amarin PLC | Luye Pharma vs. Novartis AG ADR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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