Correlation Between Takeda Pharmaceutical and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Takeda Pharmaceutical 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 Takeda Pharmaceutical and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Takeda Pharmaceutical Co and Bayer AG, you can compare the effects of market volatilities on Takeda Pharmaceutical 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 Takeda Pharmaceutical with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Takeda Pharmaceutical and Bayer AG.
Diversification Opportunities for Takeda Pharmaceutical and Bayer AG
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Takeda and Bayer is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Takeda Pharmaceutical 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 Takeda Pharmaceutical Co 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 Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Bayer AG go up and down completely randomly.
Pair Corralation between Takeda Pharmaceutical and Bayer AG
Assuming the 90 days horizon Takeda Pharmaceutical Co is expected to generate 0.93 times more return on investment than Bayer AG. However, Takeda Pharmaceutical Co is 1.07 times less risky than Bayer AG. It trades about -0.07 of its potential returns per unit of risk. Bayer AG is currently generating about -0.37 per unit of risk. If you would invest 2,700 in Takeda Pharmaceutical Co on September 2, 2024 and sell it today you would lose (160.00) from holding Takeda Pharmaceutical Co or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Takeda Pharmaceutical Co vs. Bayer AG
Performance |
| Timeline |
| Takeda Pharmaceutical |
| Bayer AG |
Takeda Pharmaceutical and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Takeda Pharmaceutical and Bayer AG
The main advantage of trading using opposite Takeda Pharmaceutical and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Takeda Pharmaceutical 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.| Takeda Pharmaceutical vs. Astellas Pharma | Takeda Pharmaceutical vs. Daiichi Sankyo | Takeda Pharmaceutical vs. Chugai Pharmaceutical Co | Takeda Pharmaceutical vs. Bayer AG |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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