Correlation Between ASTELLAS PHARMA and Bayer AG
Can any of the company-specific risk be diversified away by investing in both ASTELLAS PHARMA and Bayer AG 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 AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASTELLAS PHARMA UNSPADR and Bayer AG NA, you can compare the effects of market volatilities on ASTELLAS PHARMA and Bayer AG 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 AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASTELLAS PHARMA and Bayer AG.
Diversification Opportunities for ASTELLAS PHARMA and Bayer AG
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ASTELLAS and Bayer is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ASTELLAS PHARMA UNSPADR and Bayer AG NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG NA 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 UNSPADR are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG NA has no effect on the direction of ASTELLAS PHARMA i.e., ASTELLAS PHARMA and Bayer AG go up and down completely randomly.
Pair Corralation between ASTELLAS PHARMA and Bayer AG
Assuming the 90 days trading horizon ASTELLAS PHARMA is expected to generate 1.71 times less return on investment than Bayer AG. In addition to that, ASTELLAS PHARMA is 1.13 times more volatile than Bayer AG NA. It trades about 0.06 of its total potential returns per unit of risk. Bayer AG NA is currently generating about 0.11 per unit of volatility. If you would invest 2,156 in Bayer AG NA on November 27, 2024 and sell it today you would earn a total of 68.00 from holding Bayer AG NA or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASTELLAS PHARMA UNSPADR vs. Bayer AG NA
Performance |
| Timeline |
| ASTELLAS PHARMA UNSPADR |
| Bayer AG NA |
ASTELLAS PHARMA and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASTELLAS PHARMA and Bayer AG
The main advantage of trading using opposite ASTELLAS PHARMA and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTELLAS PHARMA position performs unexpectedly, Bayer AG 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 AG will offset losses from the drop in Bayer AG's long position.| ASTELLAS PHARMA vs. CONAGRA FOODS | ASTELLAS PHARMA vs. IRONVELD PLC LS | ASTELLAS PHARMA vs. SLIGRO FOOD GROUP | ASTELLAS PHARMA vs. DaChan Food Limited |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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