Correlation Between UmweltBank and Takeda Pharmaceutical

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

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

Diversification Opportunities for UmweltBank and Takeda Pharmaceutical

-0.85

Correlation Coefficient

UmweltBank  Takeda Pharmaceutical

Pay attention - limited upside

The 3 months correlation between UmweltBank and Takeda is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding UmweltBank AG and Takeda Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical and UmweltBank 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 UmweltBank AG are associated (or correlated) with Takeda Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takeda Pharmaceutical has no effect on the direction of UmweltBank i.e., UmweltBank and Takeda Pharmaceutical go up and down completely randomly.

Pair Corralation between UmweltBank and Takeda Pharmaceutical

Assuming the 90 days trading horizon UmweltBank AG is expected to under-perform the Takeda Pharmaceutical. In addition to that, UmweltBank is 1.37 times more volatile than Takeda Pharmaceutical. It trades about -0.19 of its total potential returns per unit of risk. Takeda Pharmaceutical is currently generating about 0.13 per unit of volatility. If you would invest  1,250  in Takeda Pharmaceutical on December 25, 2024 and sell it today you would earn a total of  130.00  from holding Takeda Pharmaceutical or generate 10.4% return on investment over 90 days.

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

UmweltBank AG  vs.  Takeda Pharmaceutical

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG 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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Takeda Pharmaceutical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Takeda Pharmaceutical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Takeda Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UmweltBank and Takeda Pharmaceutical

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

The idea behind UmweltBank AG and Takeda Pharmaceutical 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.