Correlation Between Takeda Pharmaceutical and Kaya Holdings

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

Diversification Opportunities for Takeda Pharmaceutical and Kaya Holdings

0.72

Correlation Coefficient

Takeda Pharmaceutical  Kaya Holdings

Poor diversification

The 3 months correlation between Takeda and Kaya is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Kaya Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaya Holdings 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 Kaya Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaya Holdings has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Kaya Holdings go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Kaya Holdings

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to under-perform the Kaya Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Takeda Pharmaceutical Co is 6.91 times less risky than Kaya Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The Kaya Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3.10  in Kaya Holdings on October 6, 2024 and sell it today you would lose (0.13) from holding Kaya Holdings or give up 4.19% of portfolio value over 90 days.

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

Takeda Pharmaceutical Co  vs.  Kaya Holdings

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 latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Kaya Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kaya Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Takeda Pharmaceutical and Kaya Holdings

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

The idea behind Takeda Pharmaceutical Co and Kaya Holdings 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.