Correlation Between ANGLO ASIAN and Jazz Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both ANGLO ASIAN and Jazz Pharmaceuticals 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 ANGLO ASIAN and Jazz Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ANGLO ASIAN MINING and Jazz Pharmaceuticals plc, you can compare the effects of market volatilities on ANGLO ASIAN and Jazz Pharmaceuticals 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 ANGLO ASIAN with a short position of Jazz Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO ASIAN and Jazz Pharmaceuticals.

Diversification Opportunities for ANGLO ASIAN and Jazz Pharmaceuticals

-0.74

Correlation Coefficient

ANGLO ASIAN  Jazz Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between ANGLO and Jazz is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO ASIAN MINING and Jazz Pharmaceuticals plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jazz Pharmaceuticals plc and ANGLO ASIAN 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 ANGLO ASIAN MINING are associated (or correlated) with Jazz Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jazz Pharmaceuticals plc has no effect on the direction of ANGLO ASIAN i.e., ANGLO ASIAN and Jazz Pharmaceuticals go up and down completely randomly.

Pair Corralation between ANGLO ASIAN and Jazz Pharmaceuticals

Assuming the 90 days trading horizon ANGLO ASIAN MINING is expected to generate 2.42 times more return on investment than Jazz Pharmaceuticals. However, ANGLO ASIAN is 2.42 times more volatile than Jazz Pharmaceuticals plc. It trades about 0.08 of its potential returns per unit of risk. Jazz Pharmaceuticals plc is currently generating about 0.0 per unit of risk. If you would invest  53.00  in ANGLO ASIAN MINING on October 27, 2024 and sell it today you would earn a total of  76.00  from holding ANGLO ASIAN MINING or generate 143.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.68%
Values	Daily Returns

ANGLO ASIAN MINING  vs.  Jazz Pharmaceuticals plc

ANGLO ASIAN MINING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANGLO ASIAN MINING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ANGLO ASIAN is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Jazz Pharmaceuticals plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jazz Pharmaceuticals plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Jazz Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANGLO ASIAN and Jazz Pharmaceuticals

The main advantage of trading using opposite ANGLO ASIAN and Jazz Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANGLO ASIAN position performs unexpectedly, Jazz Pharmaceuticals 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 Jazz Pharmaceuticals will offset losses from the drop in Jazz Pharmaceuticals' long position.

The idea behind ANGLO ASIAN MINING and Jazz Pharmaceuticals plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.