Correlation Between CSPC PHARMACEUTGR and ASTELLAS PHARMA

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

By analyzing existing cross correlation between CSPC PHARMACEUTGR ADR4 and ASTELLAS PHARMA UNSPADR, you can compare the effects of market volatilities on CSPC PHARMACEUTGR and ASTELLAS PHARMA 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 CSPC PHARMACEUTGR with a short position of ASTELLAS PHARMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSPC PHARMACEUTGR and ASTELLAS PHARMA.

Diversification Opportunities for CSPC PHARMACEUTGR and ASTELLAS PHARMA

0.05

Correlation Coefficient

CSPC PHARMACEUTGR  ASTELLAS PHARMA

Significant diversification

The 3 months correlation between CSPC and ASTELLAS is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CSPC PHARMACEUTGR ADR4 and ASTELLAS PHARMA UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTELLAS PHARMA UNSPADR and CSPC PHARMACEUTGR 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 CSPC PHARMACEUTGR ADR4 are associated (or correlated) with ASTELLAS PHARMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTELLAS PHARMA UNSPADR has no effect on the direction of CSPC PHARMACEUTGR i.e., CSPC PHARMACEUTGR and ASTELLAS PHARMA go up and down completely randomly.

Pair Corralation between CSPC PHARMACEUTGR and ASTELLAS PHARMA

Assuming the 90 days trading horizon CSPC PHARMACEUTGR ADR4 is expected to generate 2.58 times more return on investment than ASTELLAS PHARMA. However, CSPC PHARMACEUTGR is 2.58 times more volatile than ASTELLAS PHARMA UNSPADR. It trades about 0.03 of its potential returns per unit of risk. ASTELLAS PHARMA UNSPADR is currently generating about -0.01 per unit of risk. If you would invest  216.00  in CSPC PHARMACEUTGR ADR4 on December 29, 2024 and sell it today you would earn a total of  6.00  from holding CSPC PHARMACEUTGR ADR4 or generate 2.78% return on investment over 90 days.

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

CSPC PHARMACEUTGR ADR4  vs.  ASTELLAS PHARMA UNSPADR

CSPC PHARMACEUTGR ADR4

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSPC PHARMACEUTGR ADR4 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, CSPC PHARMACEUTGR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ASTELLAS PHARMA UNSPADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASTELLAS PHARMA UNSPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, ASTELLAS PHARMA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CSPC PHARMACEUTGR and ASTELLAS PHARMA

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

The idea behind CSPC PHARMACEUTGR ADR4 and ASTELLAS PHARMA UNSPADR 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..