Correlation Between Thermo Fisher and WuXi AppTec
Can any of the company-specific risk be diversified away by investing in both Thermo Fisher 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 Thermo Fisher and WuXi AppTec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermo Fisher Scientific and WuXi AppTec Co, you can compare the effects of market volatilities on Thermo Fisher 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 Thermo Fisher with a short position of WuXi AppTec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermo Fisher and WuXi AppTec.
Diversification Opportunities for Thermo Fisher and WuXi AppTec
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thermo and WuXi is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and WuXi AppTec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi AppTec and Thermo Fisher 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 Thermo Fisher Scientific 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 Thermo Fisher i.e., Thermo Fisher and WuXi AppTec go up and down completely randomly.
Pair Corralation between Thermo Fisher and WuXi AppTec
Assuming the 90 days horizon Thermo Fisher Scientific is expected to generate 0.44 times more return on investment than WuXi AppTec. However, Thermo Fisher Scientific is 2.28 times less risky than WuXi AppTec. It trades about -0.09 of its potential returns per unit of risk. WuXi AppTec Co is currently generating about -0.09 per unit of risk. If you would invest 51,620 in Thermo Fisher Scientific on August 26, 2024 and sell it today you would lose (2,115) from holding Thermo Fisher Scientific or give up 4.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermo Fisher Scientific vs. WuXi AppTec Co
Performance |
| Timeline |
| Thermo Fisher Scientific |
| WuXi AppTec |
Thermo Fisher and WuXi AppTec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermo Fisher and WuXi AppTec
The main advantage of trading using opposite Thermo Fisher and WuXi AppTec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermo Fisher 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.| Thermo Fisher vs. DexCom Inc | Thermo Fisher vs. Superior Plus Corp | Thermo Fisher vs. Origin Agritech | Thermo Fisher vs. Identiv |
| WuXi AppTec vs. COSMOSTEEL HLDGS | WuXi AppTec vs. CosmoSteel Holdings Limited | WuXi AppTec vs. Lamar Advertising | WuXi AppTec vs. SALESFORCE INC CDR |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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