Correlation Between Astellas Pharma and Bayer Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both Astellas Pharma and Bayer Aktiengesellscha 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 Astellas Pharma and Bayer Aktiengesellscha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astellas Pharma and Bayer Aktiengesellschaft, you can compare the effects of market volatilities on Astellas Pharma and Bayer Aktiengesellscha 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 Astellas Pharma with a short position of Bayer Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astellas Pharma and Bayer Aktiengesellscha.
Diversification Opportunities for Astellas Pharma and Bayer Aktiengesellscha
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Astellas and Bayer is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Astellas Pharma and Bayer Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer Aktiengesellschaft and Astellas Pharma 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 Astellas Pharma are associated (or correlated) with Bayer Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer Aktiengesellschaft has no effect on the direction of Astellas Pharma i.e., Astellas Pharma and Bayer Aktiengesellscha go up and down completely randomly.
Pair Corralation between Astellas Pharma and Bayer Aktiengesellscha
Assuming the 90 days horizon Astellas Pharma is expected to generate 0.45 times more return on investment than Bayer Aktiengesellscha. However, Astellas Pharma is 2.21 times less risky than Bayer Aktiengesellscha. It trades about -0.01 of its potential returns per unit of risk. Bayer Aktiengesellschaft is currently generating about -0.02 per unit of risk. If you would invest 1,038 in Astellas Pharma on August 29, 2024 and sell it today you would lose (88.00) from holding Astellas Pharma or give up 8.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Astellas Pharma vs. Bayer Aktiengesellschaft
Performance |
| Timeline |
| Astellas Pharma |
| Bayer Aktiengesellschaft |
Astellas Pharma and Bayer Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astellas Pharma and Bayer Aktiengesellscha
The main advantage of trading using opposite Astellas Pharma and Bayer Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astellas Pharma position performs unexpectedly, Bayer Aktiengesellscha 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 Aktiengesellscha will offset losses from the drop in Bayer Aktiengesellscha's long position.| Astellas Pharma vs. Johnson Johnson | Astellas Pharma vs. Merck Co | Astellas Pharma vs. Roche Holding Ltd | Astellas Pharma vs. Amgen Inc |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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