Correlation Between Lees Pharmaceutical and Salzgitter
Can any of the company-specific risk be diversified away by investing in both Lees Pharmaceutical and Salzgitter 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 Lees Pharmaceutical and Salzgitter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lees Pharmaceutical Holdings and Salzgitter AG ADR, you can compare the effects of market volatilities on Lees Pharmaceutical and Salzgitter 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 Lees Pharmaceutical with a short position of Salzgitter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lees Pharmaceutical and Salzgitter.
Diversification Opportunities for Lees Pharmaceutical and Salzgitter
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lees and Salzgitter is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lees Pharmaceutical Holdings and Salzgitter AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salzgitter AG ADR and Lees Pharmaceutical 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 Lees Pharmaceutical Holdings are associated (or correlated) with Salzgitter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salzgitter AG ADR has no effect on the direction of Lees Pharmaceutical i.e., Lees Pharmaceutical and Salzgitter go up and down completely randomly.
Pair Corralation between Lees Pharmaceutical and Salzgitter
Assuming the 90 days horizon Lees Pharmaceutical Holdings is expected to under-perform the Salzgitter. In addition to that, Lees Pharmaceutical is 24.87 times more volatile than Salzgitter AG ADR. It trades about -0.1 of its total potential returns per unit of risk. Salzgitter AG ADR is currently generating about -0.03 per unit of volatility. If you would invest 303.00 in Salzgitter AG ADR on September 26, 2024 and sell it today you would lose (145.00) from holding Salzgitter AG ADR or give up 47.85% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 32.0% |
Values | Daily Returns |
Lees Pharmaceutical Holdings vs. Salzgitter AG ADR
Performance |
Timeline |
Lees Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Salzgitter AG ADR |
Lees Pharmaceutical and Salzgitter Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lees Pharmaceutical and Salzgitter
The main advantage of trading using opposite Lees Pharmaceutical and Salzgitter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lees Pharmaceutical position performs unexpectedly, Salzgitter 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 Salzgitter will offset losses from the drop in Salzgitter's long position.Lees Pharmaceutical vs. Haverty Furniture Companies | Lees Pharmaceutical vs. Smith Douglas Homes | Lees Pharmaceutical vs. Zijin Mining Group | Lees Pharmaceutical vs. Sphere Entertainment Co |
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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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