Correlation Between ASPEN PHARUNADR and Hisamitsu Pharmaceutical

Can any of the company-specific risk be diversified away by investing in both ASPEN PHARUNADR and Hisamitsu Pharmaceutical 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 ASPEN PHARUNADR and Hisamitsu Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASPEN PHARUNADR 1 and Hisamitsu Pharmaceutical Co, you can compare the effects of market volatilities on ASPEN PHARUNADR and Hisamitsu Pharmaceutical 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 ASPEN PHARUNADR with a short position of Hisamitsu Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN PHARUNADR and Hisamitsu Pharmaceutical.

Diversification Opportunities for ASPEN PHARUNADR and Hisamitsu Pharmaceutical

-0.6

Correlation Coefficient

ASPEN PHARUNADR  Hisamitsu Pharmaceutical

Excellent diversification

The 3 months correlation between ASPEN and Hisamitsu is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN PHARUNADR 1 and Hisamitsu Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisamitsu Pharmaceutical and ASPEN PHARUNADR 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 ASPEN PHARUNADR 1 are associated (or correlated) with Hisamitsu Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisamitsu Pharmaceutical has no effect on the direction of ASPEN PHARUNADR i.e., ASPEN PHARUNADR and Hisamitsu Pharmaceutical go up and down completely randomly.

Pair Corralation between ASPEN PHARUNADR and Hisamitsu Pharmaceutical

Assuming the 90 days trading horizon ASPEN PHARUNADR 1 is expected to under-perform the Hisamitsu Pharmaceutical. In addition to that, ASPEN PHARUNADR is 1.64 times more volatile than Hisamitsu Pharmaceutical Co. It trades about -0.11 of its total potential returns per unit of risk. Hisamitsu Pharmaceutical Co is currently generating about -0.11 per unit of volatility. If you would invest  2,580  in Hisamitsu Pharmaceutical Co on September 24, 2024 and sell it today you would lose (60.00) from holding Hisamitsu Pharmaceutical Co or give up 2.33% of portfolio value over 90 days.

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

ASPEN PHARUNADR 1  vs.  Hisamitsu Pharmaceutical Co

ASPEN PHARUNADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASPEN PHARUNADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Hisamitsu Pharmaceutical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hisamitsu Pharmaceutical Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hisamitsu Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ASPEN PHARUNADR and Hisamitsu Pharmaceutical

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

The idea behind ASPEN PHARUNADR 1 and Hisamitsu Pharmaceutical Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.