Correlation Between Takeda Pharmaceutical and Abeona Therapeutics

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

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

Diversification Opportunities for Takeda Pharmaceutical and Abeona Therapeutics

-0.54

Correlation Coefficient

Takeda Pharmaceutical  Abeona Therapeutics

Excellent diversification

The 3 months correlation between Takeda and Abeona is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Takeda 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 Takeda Pharmaceutical Co are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Abeona Therapeutics

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to generate 0.39 times more return on investment than Abeona Therapeutics. However, Takeda Pharmaceutical Co is 2.56 times less risky than Abeona Therapeutics. It trades about 0.2 of its potential returns per unit of risk. Abeona Therapeutics is currently generating about -0.05 per unit of risk. If you would invest  1,317  in Takeda Pharmaceutical Co on December 28, 2024 and sell it today you would earn a total of  185.00  from holding Takeda Pharmaceutical Co or generate 14.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Takeda Pharmaceutical Co  vs.  Abeona Therapeutics

Takeda Pharmaceutical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Takeda Pharmaceutical disclosed solid returns over the last few months and may actually be approaching a breakup point.

Abeona Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abeona Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Takeda Pharmaceutical and Abeona Therapeutics

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

The idea behind Takeda Pharmaceutical Co and Abeona Therapeutics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.