Correlation Between Amada and Roche Holding
Can any of the company-specific risk be diversified away by investing in both Amada and Roche Holding 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 Amada and Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amada Co and Roche Holding AG, you can compare the effects of market volatilities on Amada and Roche Holding 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 Amada with a short position of Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amada and Roche Holding.
Diversification Opportunities for Amada and Roche Holding
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Amada and Roche is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amada Co and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG and Amada 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 Amada Co are associated (or correlated) with Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of Amada i.e., Amada and Roche Holding go up and down completely randomly.
Pair Corralation between Amada and Roche Holding
Assuming the 90 days horizon Amada is expected to generate 253.0 times less return on investment than Roche Holding. But when comparing it to its historical volatility, Amada Co is 1.97 times less risky than Roche Holding. It trades about 0.0 of its potential returns per unit of risk. Roche Holding AG is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26,969 in Roche Holding AG on January 25, 2024 and sell it today you would lose (186.00) from holding Roche Holding AG or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Amada Co vs. Roche Holding AG
Performance |
| Timeline |
| Amada |
| Roche Holding AG |
Amada and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amada and Roche Holding
The main advantage of trading using opposite Amada and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amada position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.The idea behind Amada Co and Roche Holding AG 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.| Roche Holding vs. Santen Pharmaceutical Co | Roche Holding vs. Grifols SA ADR | Roche Holding vs. Pfizer Inc | Roche Holding vs. Sanofi ADR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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