Correlation Between AstraZeneca PLC and Champions Oncology

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

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

Diversification Opportunities for AstraZeneca PLC and Champions Oncology

-0.78

Correlation Coefficient

AstraZeneca PLC  Champions Oncology

Pay attention - limited upside

The 3 months correlation between AstraZeneca and Champions is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and Champions Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champions Oncology and AstraZeneca PLC 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 AstraZeneca PLC ADR are associated (or correlated) with Champions Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champions Oncology has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Champions Oncology go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Champions Oncology

Considering the 90-day investment horizon AstraZeneca PLC ADR is expected to generate 0.47 times more return on investment than Champions Oncology. However, AstraZeneca PLC ADR is 2.14 times less risky than Champions Oncology. It trades about 0.27 of its potential returns per unit of risk. Champions Oncology is currently generating about -0.11 per unit of risk. If you would invest  6,619  in AstraZeneca PLC ADR on March 7, 2024 and sell it today you would earn a total of  1,383  from holding AstraZeneca PLC ADR or generate 20.89% return on investment over 90 days.

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

AstraZeneca PLC ADR  vs.  Champions Oncology

AstraZeneca PLC ADR

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC ADR are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, AstraZeneca PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Champions Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champions Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with AstraZeneca PLC and Champions Oncology

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

The idea behind AstraZeneca PLC ADR and Champions Oncology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.