Correlation Between Takeda Pharmaceutical and Amphastar

Can any of the company-specific risk be diversified away by investing in both Takeda Pharmaceutical and Amphastar 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 Amphastar 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 Amphastar P, you can compare the effects of market volatilities on Takeda Pharmaceutical and Amphastar 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 Amphastar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Takeda Pharmaceutical and Amphastar.

Diversification Opportunities for Takeda Pharmaceutical and Amphastar

0.01

Correlation Coefficient

Takeda Pharmaceutical  Amphastar

Significant diversification

The 3 months correlation between Takeda and Amphastar is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Amphastar P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphastar P 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 Amphastar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphastar P has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Amphastar go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Amphastar

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to generate 0.86 times more return on investment than Amphastar. However, Takeda Pharmaceutical Co is 1.16 times less risky than Amphastar. It trades about 0.24 of its potential returns per unit of risk. Amphastar P is currently generating about -0.47 per unit of risk. If you would invest  1,335  in Takeda Pharmaceutical Co on November 28, 2024 and sell it today you would earn a total of  101.00  from holding Takeda Pharmaceutical Co or generate 7.57% return on investment over 90 days.

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

Takeda Pharmaceutical Co  vs.  Amphastar P

Takeda Pharmaceutical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Takeda Pharmaceutical is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Amphastar P

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amphastar P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Takeda Pharmaceutical and Amphastar

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

The idea behind Takeda Pharmaceutical Co and Amphastar P 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.