Correlation Between Horizon Pharma and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Horizon Pharma and Bayer AG 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 Horizon Pharma and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Pharma PLC and Bayer AG, you can compare the effects of market volatilities on Horizon Pharma and Bayer AG 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 Horizon Pharma with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Pharma and Bayer AG.
Diversification Opportunities for Horizon Pharma and Bayer AG
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Horizon and Bayer is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Pharma PLC and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG and Horizon Pharma 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 Horizon Pharma PLC are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Horizon Pharma i.e., Horizon Pharma and Bayer AG go up and down completely randomly.
Pair Corralation between Horizon Pharma and Bayer AG
If you would invest 10,040 in Horizon Pharma PLC on September 16, 2024 and sell it today you would earn a total of 0.00 from holding Horizon Pharma PLC or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 1.54% |
Values | Daily Returns |
Horizon Pharma PLC vs. Bayer AG
Performance |
Timeline |
Horizon Pharma PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bayer AG |
Horizon Pharma and Bayer AG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Horizon Pharma and Bayer AG
The main advantage of trading using opposite Horizon Pharma and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Pharma position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.Horizon Pharma vs. Bristol Myers Squibb | Horizon Pharma vs. AbbVie Inc | Horizon Pharma vs. Merck Company | Horizon Pharma vs. Gilead Sciences |
Bayer AG vs. Sanofi ADR | Bayer AG vs. Bristol Myers Squibb | Bayer AG vs. AstraZeneca PLC ADR | Bayer AG vs. Gilead Sciences |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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