Correlation Between Teva Pharma and 1CM
Can any of the company-specific risk be diversified away by investing in both Teva Pharma and 1CM 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 Teva Pharma and 1CM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharma Industries and 1CM Inc, you can compare the effects of market volatilities on Teva Pharma and 1CM 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 Teva Pharma with a short position of 1CM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharma and 1CM.
Diversification Opportunities for Teva Pharma and 1CM
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Teva and 1CM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharma Industries and 1CM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1CM Inc and Teva 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 Teva Pharma Industries are associated (or correlated) with 1CM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1CM Inc has no effect on the direction of Teva Pharma i.e., Teva Pharma and 1CM go up and down completely randomly.
Pair Corralation between Teva Pharma and 1CM
Given the investment horizon of 90 days Teva Pharma Industries is expected to generate 0.55 times more return on investment than 1CM. However, Teva Pharma Industries is 1.82 times less risky than 1CM. It trades about -0.23 of its potential returns per unit of risk. 1CM Inc is currently generating about -0.29 per unit of risk. If you would invest 1,837 in Teva Pharma Industries on August 29, 2024 and sell it today you would lose (178.00) from holding Teva Pharma Industries or give up 9.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharma Industries vs. 1CM Inc
Performance |
| Timeline |
| Teva Pharma Industries |
| 1CM Inc |
Teva Pharma and 1CM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharma and 1CM
The main advantage of trading using opposite Teva Pharma and 1CM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharma position performs unexpectedly, 1CM 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 1CM will offset losses from the drop in 1CM's long position.| Teva Pharma vs. Haleon plc | Teva Pharma vs. Bausch Health Companies | Teva Pharma vs. Zoetis Inc | Teva Pharma vs. Takeda Pharmaceutical Co |
| 1CM vs. Green Cures Botanical | 1CM vs. Cann American Corp | 1CM vs. Rimrock Gold Corp | 1CM vs. Galexxy Holdings |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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