Correlation Between AstraZeneca PLC and Chrysalis Investments

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

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

Diversification Opportunities for AstraZeneca PLC and Chrysalis Investments

-0.33

Correlation Coefficient

AstraZeneca PLC  Chrysalis Investments

Very good diversification

The 3 months correlation between AstraZeneca and Chrysalis is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Chrysalis Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chrysalis Investments and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with Chrysalis Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chrysalis Investments has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Chrysalis Investments go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Chrysalis Investments

Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 0.6 times more return on investment than Chrysalis Investments. However, AstraZeneca PLC is 1.66 times less risky than Chrysalis Investments. It trades about 0.33 of its potential returns per unit of risk. Chrysalis Investments is currently generating about -0.12 per unit of risk. If you would invest  1,024,400  in AstraZeneca PLC on October 20, 2024 and sell it today you would earn a total of  69,400  from holding AstraZeneca PLC or generate 6.77% return on investment over 90 days.

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

AstraZeneca PLC  vs.  Chrysalis Investments

AstraZeneca PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Chrysalis Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chrysalis Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Chrysalis Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AstraZeneca PLC and Chrysalis Investments

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

The idea behind AstraZeneca PLC and Chrysalis Investments 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.