Correlation Between Takeda Pharmaceutical and American Green

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

Diversification Opportunities for Takeda Pharmaceutical and American Green

-0.63

Correlation Coefficient

Takeda Pharmaceutical  American Green

Excellent diversification

The 3 months correlation between Takeda and American is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green 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 American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and American Green go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and American Green

Assuming the 90 days horizon Takeda Pharmaceutical Co is expected to generate 0.18 times more return on investment than American Green. However, Takeda Pharmaceutical Co is 5.52 times less risky than American Green. It trades about 0.13 of its potential returns per unit of risk. American Green is currently generating about 0.01 per unit of risk. If you would invest  2,591  in Takeda Pharmaceutical Co on December 29, 2024 and sell it today you would earn a total of  546.00  from holding Takeda Pharmaceutical Co or generate 21.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Takeda Pharmaceutical Co  vs.  American Green

Takeda Pharmaceutical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Takeda Pharmaceutical reported solid returns over the last few months and may actually be approaching a breakup point.

American Green

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, American Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Takeda Pharmaceutical and American Green

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

The idea behind Takeda Pharmaceutical Co and American Green 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.