Correlation Between Beyond Air and AstraZeneca PLC

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

By analyzing existing cross correlation between Beyond Air and AstraZeneca PLC ADR, you can compare the effects of market volatilities on Beyond Air and AstraZeneca PLC 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 Beyond Air with a short position of AstraZeneca PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beyond Air and AstraZeneca PLC.

Diversification Opportunities for Beyond Air and AstraZeneca PLC

-0.41

Correlation Coefficient

Beyond Air  AstraZeneca PLC

Very good diversification

The 3 months correlation between Beyond and AstraZeneca is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Air and AstraZeneca PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AstraZeneca PLC ADR and Beyond Air 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 Beyond Air are associated (or correlated) with AstraZeneca PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AstraZeneca PLC ADR has no effect on the direction of Beyond Air i.e., Beyond Air and AstraZeneca PLC go up and down completely randomly.

Pair Corralation between Beyond Air and AstraZeneca PLC

Given the investment horizon of 90 days Beyond Air is expected to generate 4.45 times more return on investment than AstraZeneca PLC. However, Beyond Air is 4.45 times more volatile than AstraZeneca PLC ADR. It trades about 0.07 of its potential returns per unit of risk. AstraZeneca PLC ADR is currently generating about -0.14 per unit of risk. If you would invest  36.00  in Beyond Air on October 21, 2024 and sell it today you would earn a total of  6.00  from holding Beyond Air or generate 16.67% return on investment over 90 days.

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

Beyond Air  vs.  AstraZeneca PLC ADR

Beyond Air

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

AstraZeneca PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Beyond Air and AstraZeneca PLC

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

The idea behind Beyond Air and AstraZeneca PLC ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.