Correlation Between Takeda Pharmaceutical and CanSino Biologics

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

Diversification Opportunities for Takeda Pharmaceutical and CanSino Biologics

-0.31

Correlation Coefficient

Takeda Pharmaceutical  CanSino Biologics

Very good diversification

The 3 months correlation between Takeda and CanSino is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics 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 CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and CanSino Biologics go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and CanSino Biologics

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to generate 0.24 times more return on investment than CanSino Biologics. However, Takeda Pharmaceutical Co is 4.19 times less risky than CanSino Biologics. It trades about -0.12 of its potential returns per unit of risk. CanSino Biologics is currently generating about -0.08 per unit of risk. If you would invest  1,349  in Takeda Pharmaceutical Co on October 25, 2024 and sell it today you would lose (60.00) from holding Takeda Pharmaceutical Co or give up 4.45% of portfolio value over 90 days.

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

Takeda Pharmaceutical Co  vs.  CanSino Biologics

Takeda Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Takeda Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

CanSino Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CanSino Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, CanSino Biologics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Takeda Pharmaceutical and CanSino Biologics

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

The idea behind Takeda Pharmaceutical Co and CanSino Biologics 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 Valuation module to check real value of public entities based on technical and fundamental data.