Correlation Between AstraZeneca PLC and Primorus Investments

Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and Primorus 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 Primorus 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 Primorus Investments plc, you can compare the effects of market volatilities on AstraZeneca PLC and Primorus 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 Primorus Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Primorus Investments.

Diversification Opportunities for AstraZeneca PLC and Primorus Investments

-0.57

Correlation Coefficient

AstraZeneca PLC  Primorus Investments

Excellent diversification

The 3 months correlation between AstraZeneca and Primorus is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Primorus Investments plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primorus Investments plc 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 Primorus Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primorus Investments plc has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Primorus Investments go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Primorus Investments

Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 0.37 times more return on investment than Primorus Investments. However, AstraZeneca PLC is 2.72 times less risky than Primorus Investments. It trades about 0.12 of its potential returns per unit of risk. Primorus Investments plc is currently generating about 0.0 per unit of risk. If you would invest  1,030,986  in AstraZeneca PLC on December 26, 2024 and sell it today you would earn a total of  100,614  from holding AstraZeneca PLC or generate 9.76% return on investment over 90 days.

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

AstraZeneca PLC  vs.  Primorus Investments plc

AstraZeneca PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, AstraZeneca PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Primorus Investments plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Primorus Investments plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Primorus Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AstraZeneca PLC and Primorus Investments

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

The idea behind AstraZeneca PLC and Primorus Investments 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.