Correlation Between Astar and ROYALTY

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

By analyzing existing cross correlation between Astar and ROYALTY PHARMA PLC, you can compare the effects of market volatilities on Astar and ROYALTY 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 Astar with a short position of ROYALTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and ROYALTY.

Diversification Opportunities for Astar and ROYALTY

0.18

Correlation Coefficient

Astar  ROYALTY

Average diversification

The 3 months correlation between Astar and ROYALTY is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Astar and ROYALTY PHARMA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROYALTY PHARMA PLC and Astar 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 Astar are associated (or correlated) with ROYALTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROYALTY PHARMA PLC has no effect on the direction of Astar i.e., Astar and ROYALTY go up and down completely randomly.

Pair Corralation between Astar and ROYALTY

Assuming the 90 days trading horizon Astar is expected to under-perform the ROYALTY. In addition to that, Astar is 5.07 times more volatile than ROYALTY PHARMA PLC. It trades about -0.19 of its total potential returns per unit of risk. ROYALTY PHARMA PLC is currently generating about -0.12 per unit of volatility. If you would invest  9,195  in ROYALTY PHARMA PLC on December 24, 2024 and sell it today you would lose (645.00) from holding ROYALTY PHARMA PLC or give up 7.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

Astar  vs.  ROYALTY PHARMA PLC

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Astar shareholders.

ROYALTY PHARMA PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ROYALTY PHARMA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ROYALTY PHARMA PLC investors.

Pair Trading with Astar and ROYALTY

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

The idea behind Astar and ROYALTY PHARMA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.