Correlation Between Eton Pharmaceuticals and AstraZeneca PLC

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

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

Diversification Opportunities for Eton Pharmaceuticals and AstraZeneca PLC

-0.84

Correlation Coefficient

Eton Pharmaceuticals  AstraZeneca PLC

Pay attention - limited upside

The 3 months correlation between Eton and AstraZeneca is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Eton Pharmaceuticals and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Eton Pharmaceuticals 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 Eton Pharmaceuticals are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Eton Pharmaceuticals i.e., Eton Pharmaceuticals and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Eton Pharmaceuticals and AstraZeneca PLC

Given the investment horizon of 90 days Eton Pharmaceuticals is expected to generate 2.82 times more return on investment than AstraZeneca PLC. However, Eton Pharmaceuticals is 2.82 times more volatile than AstraZeneca PLC ADR. It trades about 0.39 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about -0.25 per unit of risk. If you would invest  461.00  in Eton Pharmaceuticals on September 4, 2024 and sell it today you would earn a total of  785.00  from holding Eton Pharmaceuticals or generate 170.28% return on investment over 90 days.

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

Eton Pharmaceuticals  vs.  AstraZeneca PLC ADR

Eton Pharmaceuticals

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eton Pharmaceuticals are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eton Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

AstraZeneca PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eton Pharmaceuticals and AstraZeneca PLC

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

The idea behind Eton Pharmaceuticals and AstraZeneca PLC ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.