Correlation Between Astellas Pharma and Daiichi Sankyo

Can any of the company-specific risk be diversified away by investing in both Astellas Pharma and Daiichi Sankyo 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 Daiichi Sankyo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Astellas Pharma and Daiichi Sankyo Co, you can compare the effects of market volatilities on Astellas Pharma and Daiichi Sankyo 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 Daiichi Sankyo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astellas Pharma and Daiichi Sankyo.

Diversification Opportunities for Astellas Pharma and Daiichi Sankyo

0.82

Correlation Coefficient

Astellas Pharma  Daiichi Sankyo

Very poor diversification

The 3 months correlation between Astellas and Daiichi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Astellas Pharma and Daiichi Sankyo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiichi Sankyo 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 Daiichi Sankyo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiichi Sankyo has no effect on the direction of Astellas Pharma i.e., Astellas Pharma and Daiichi Sankyo go up and down completely randomly.

Pair Corralation between Astellas Pharma and Daiichi Sankyo

Assuming the 90 days horizon Astellas Pharma is expected to generate 1.87 times more return on investment than Daiichi Sankyo. However, Astellas Pharma is 1.87 times more volatile than Daiichi Sankyo Co. It trades about -0.09 of its potential returns per unit of risk. Daiichi Sankyo Co is currently generating about -0.21 per unit of risk. If you would invest  1,200  in Astellas Pharma on October 11, 2024 and sell it today you would lose (220.00) from holding Astellas Pharma or give up 18.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Astellas Pharma  vs.  Daiichi Sankyo Co

Astellas Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astellas Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Daiichi Sankyo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiichi Sankyo Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Astellas Pharma and Daiichi Sankyo

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

The idea behind Astellas Pharma and Daiichi Sankyo Co 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.