Correlation Between WuXi AppTec and PLAY2CHILL
Can any of the company-specific risk be diversified away by investing in both WuXi AppTec and PLAY2CHILL 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 PLAY2CHILL 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 PLAY2CHILL SA ZY, you can compare the effects of market volatilities on WuXi AppTec and PLAY2CHILL 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 PLAY2CHILL. Check out your portfolio center. Please also check ongoing floating volatility patterns of WuXi AppTec and PLAY2CHILL.
Diversification Opportunities for WuXi AppTec and PLAY2CHILL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WuXi and PLAY2CHILL is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding WuXi AppTec Co and PLAY2CHILL SA ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAY2CHILL SA ZY 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 PLAY2CHILL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAY2CHILL SA ZY has no effect on the direction of WuXi AppTec i.e., WuXi AppTec and PLAY2CHILL go up and down completely randomly.
Pair Corralation between WuXi AppTec and PLAY2CHILL
Assuming the 90 days horizon WuXi AppTec Co is expected to under-perform the PLAY2CHILL. In addition to that, WuXi AppTec is 1.11 times more volatile than PLAY2CHILL SA ZY. It trades about -0.04 of its total potential returns per unit of risk. PLAY2CHILL SA ZY is currently generating about 0.21 per unit of volatility. If you would invest 80.00 in PLAY2CHILL SA ZY on September 1, 2024 and sell it today you would earn a total of 13.00 from holding PLAY2CHILL SA ZY or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WuXi AppTec Co vs. PLAY2CHILL SA ZY
Performance |
| Timeline |
| WuXi AppTec |
| PLAY2CHILL SA ZY |
WuXi AppTec and PLAY2CHILL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WuXi AppTec and PLAY2CHILL
The main advantage of trading using opposite WuXi AppTec and PLAY2CHILL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WuXi AppTec position performs unexpectedly, PLAY2CHILL 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 PLAY2CHILL will offset losses from the drop in PLAY2CHILL's long position.| WuXi AppTec vs. Danaher | WuXi AppTec vs. Danaher | WuXi AppTec vs. SIEMENS HEALTH ADR050 | WuXi AppTec vs. DexCom Inc |
| PLAY2CHILL vs. Nintendo Co | PLAY2CHILL vs. Sea Limited | PLAY2CHILL vs. Superior Plus Corp | PLAY2CHILL vs. NMI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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