Correlation Between Takeda Pharmaceutical and Star Equity

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

Diversification Opportunities for Takeda Pharmaceutical and Star Equity

0.3

Correlation Coefficient

Takeda Pharmaceutical  Star Equity

Weak diversification

The 3 months correlation between Takeda and Star is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Star Equity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Equity 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 Star Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Equity Holdings has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Star Equity go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Star Equity

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to generate 0.36 times more return on investment than Star Equity. However, Takeda Pharmaceutical Co is 2.81 times less risky than Star Equity. It trades about 0.08 of its potential returns per unit of risk. Star Equity Holdings is currently generating about -0.14 per unit of risk. If you would invest  1,362  in Takeda Pharmaceutical Co on November 29, 2024 and sell it today you would earn a total of  74.00  from holding Takeda Pharmaceutical Co or generate 5.43% return on investment over 90 days.

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

Takeda Pharmaceutical Co  vs.  Star Equity Holdings

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.

Star Equity Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Star Equity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Takeda Pharmaceutical and Star Equity

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

The idea behind Takeda Pharmaceutical Co and Star Equity 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.