Correlation Between Beta Drugs and Aster DM

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Can any of the company-specific risk be diversified away by investing in both Beta Drugs and Aster DM 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 Beta Drugs and Aster DM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beta Drugs and Aster DM Healthcare, you can compare the effects of market volatilities on Beta Drugs and Aster DM 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 Beta Drugs with a short position of Aster DM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beta Drugs and Aster DM.

Diversification Opportunities for Beta Drugs and Aster DM

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Beta and Aster is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Beta Drugs and Aster DM Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aster DM Healthcare and Beta Drugs 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 Beta Drugs are associated (or correlated) with Aster DM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aster DM Healthcare has no effect on the direction of Beta Drugs i.e., Beta Drugs and Aster DM go up and down completely randomly.

Pair Corralation between Beta Drugs and Aster DM

Assuming the 90 days trading horizon Beta Drugs is expected to under-perform the Aster DM. In addition to that, Beta Drugs is 2.13 times more volatile than Aster DM Healthcare. It trades about -0.19 of its total potential returns per unit of risk. Aster DM Healthcare is currently generating about 0.22 per unit of volatility. If you would invest  48,905  in Aster DM Healthcare on October 12, 2024 and sell it today you would earn a total of  2,620  from holding Aster DM Healthcare or generate 5.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Beta Drugs  vs.  Aster DM Healthcare

 Performance 
       Timeline  
Beta Drugs 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Beta Drugs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Beta Drugs unveiled solid returns over the last few months and may actually be approaching a breakup point.
Aster DM Healthcare 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Beta Drugs and Aster DM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beta Drugs and Aster DM

The main advantage of trading using opposite Beta Drugs and Aster DM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beta Drugs position performs unexpectedly, Aster DM 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 Aster DM will offset losses from the drop in Aster DM's long position.
The idea behind Beta Drugs and Aster DM Healthcare 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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