Correlation Between Transtema Group and AstraZeneca PLC
Can any of the company-specific risk be diversified away by investing in both Transtema Group and AstraZeneca PLC 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 Transtema Group and AstraZeneca PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transtema Group AB and AstraZeneca PLC, you can compare the effects of market volatilities on Transtema Group and AstraZeneca PLC 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 Transtema Group with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transtema Group and AstraZeneca PLC.
Diversification Opportunities for Transtema Group and AstraZeneca PLC
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transtema and AstraZeneca is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Transtema Group AB and AstraZeneca PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC and Transtema Group 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 Transtema Group AB are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC has no effect on the direction of Transtema Group i.e., Transtema Group and AstraZeneca PLC go up and down completely randomly.
Pair Corralation between Transtema Group and AstraZeneca PLC
Assuming the 90 days trading horizon Transtema Group AB is expected to generate 1.41 times more return on investment than AstraZeneca PLC. However, Transtema Group is 1.41 times more volatile than AstraZeneca PLC. It trades about 0.07 of its potential returns per unit of risk. AstraZeneca PLC is currently generating about -0.16 per unit of risk. If you would invest 1,496 in Transtema Group AB on August 26, 2024 and sell it today you would earn a total of 58.00 from holding Transtema Group AB or generate 3.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transtema Group AB vs. AstraZeneca PLC
Performance |
| Timeline |
| Transtema Group AB |
| AstraZeneca PLC |
Transtema Group and AstraZeneca PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transtema Group and AstraZeneca PLC
The main advantage of trading using opposite Transtema Group and AstraZeneca PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transtema Group position performs unexpectedly, AstraZeneca PLC 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 AstraZeneca PLC will offset losses from the drop in AstraZeneca PLC's long position.| Transtema Group vs. AstraZeneca PLC | Transtema Group vs. Investor AB ser | Transtema Group vs. Investor AB ser | Transtema Group vs. Atlas Copco AB |
| AstraZeneca PLC vs. AB Volvo | AstraZeneca PLC vs. Telefonaktiebolaget LM Ericsson | AstraZeneca PLC vs. H M Hennes | AstraZeneca PLC vs. Investor AB ser |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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