Correlation Between WuXi AppTec and GUARDANT HEALTH
Can any of the company-specific risk be diversified away by investing in both WuXi AppTec and GUARDANT HEALTH 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 WuXi AppTec and GUARDANT HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WuXi AppTec Co and GUARDANT HEALTH CL, you can compare the effects of market volatilities on WuXi AppTec and GUARDANT HEALTH 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 WuXi AppTec with a short position of GUARDANT HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of WuXi AppTec and GUARDANT HEALTH.
Diversification Opportunities for WuXi AppTec and GUARDANT HEALTH
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between WuXi and GUARDANT is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding WuXi AppTec Co and GUARDANT HEALTH CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARDANT HEALTH CL and WuXi AppTec 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 WuXi AppTec Co are associated (or correlated) with GUARDANT HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARDANT HEALTH CL has no effect on the direction of WuXi AppTec i.e., WuXi AppTec and GUARDANT HEALTH go up and down completely randomly.
Pair Corralation between WuXi AppTec and GUARDANT HEALTH
Assuming the 90 days horizon WuXi AppTec Co is expected to generate 1.26 times more return on investment than GUARDANT HEALTH. However, WuXi AppTec is 1.26 times more volatile than GUARDANT HEALTH CL. It trades about 0.03 of its potential returns per unit of risk. GUARDANT HEALTH CL is currently generating about 0.03 per unit of risk. If you would invest 658.00 in WuXi AppTec Co on September 26, 2024 and sell it today you would earn a total of 22.00 from holding WuXi AppTec Co or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WuXi AppTec Co vs. GUARDANT HEALTH CL
Performance |
| Timeline |
| WuXi AppTec |
| GUARDANT HEALTH CL |
WuXi AppTec and GUARDANT HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WuXi AppTec and GUARDANT HEALTH
The main advantage of trading using opposite WuXi AppTec and GUARDANT HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WuXi AppTec position performs unexpectedly, GUARDANT HEALTH 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 GUARDANT HEALTH will offset losses from the drop in GUARDANT HEALTH's long position.| WuXi AppTec vs. Danaher | WuXi AppTec vs. Danaher | WuXi AppTec vs. SIEMENS HEALTH ADR050 | WuXi AppTec vs. Siemens Healthineers AG |
| GUARDANT HEALTH vs. WuXi AppTec Co | GUARDANT HEALTH vs. Danaher | GUARDANT HEALTH vs. Danaher | GUARDANT HEALTH vs. SIEMENS HEALTH ADR050 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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