Correlation Between Takeda Pharmaceutical and Hisamitsu Pharmaceutical

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

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

Diversification Opportunities for Takeda Pharmaceutical and Hisamitsu Pharmaceutical

-0.6

Correlation Coefficient

Takeda Pharmaceutical  Hisamitsu Pharmaceutical

Excellent diversification

The 3 months correlation between Takeda and Hisamitsu is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical and Hisamitsu Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisamitsu Pharmaceutical 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 are associated (or correlated) with Hisamitsu Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisamitsu Pharmaceutical has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Hisamitsu Pharmaceutical go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Hisamitsu Pharmaceutical

Assuming the 90 days trading horizon Takeda Pharmaceutical is expected to generate 0.65 times more return on investment than Hisamitsu Pharmaceutical. However, Takeda Pharmaceutical is 1.55 times less risky than Hisamitsu Pharmaceutical. It trades about 0.12 of its potential returns per unit of risk. Hisamitsu Pharmaceutical Co is currently generating about 0.04 per unit of risk. If you would invest  1,250  in Takeda Pharmaceutical on December 28, 2024 and sell it today you would earn a total of  120.00  from holding Takeda Pharmaceutical or generate 9.6% return on investment over 90 days.

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

Takeda Pharmaceutical  vs.  Hisamitsu Pharmaceutical Co

Takeda Pharmaceutical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Takeda Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hisamitsu Pharmaceutical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hisamitsu Pharmaceutical Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Hisamitsu Pharmaceutical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Takeda Pharmaceutical and Hisamitsu Pharmaceutical

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

The idea behind Takeda Pharmaceutical and Hisamitsu Pharmaceutical Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.