Correlation Between ANI Pharmaceuticals and Takeda Pharmaceutical

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

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

Diversification Opportunities for ANI Pharmaceuticals and Takeda Pharmaceutical

-0.34

Correlation Coefficient

ANI Pharmaceuticals  Takeda Pharmaceutical

Very good diversification

The 3 months correlation between ANI and Takeda is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Takeda Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takeda Pharmaceutical and ANI Pharmaceuticals 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 ANI Pharmaceuticals 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 ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Takeda Pharmaceutical go up and down completely randomly.

Pair Corralation between ANI Pharmaceuticals and Takeda Pharmaceutical

Given the investment horizon of 90 days ANI Pharmaceuticals is expected to generate 2.15 times more return on investment than Takeda Pharmaceutical. However, ANI Pharmaceuticals is 2.15 times more volatile than Takeda Pharmaceutical Co. It trades about 0.09 of its potential returns per unit of risk. Takeda Pharmaceutical Co is currently generating about 0.02 per unit of risk. If you would invest  3,211  in ANI Pharmaceuticals on February 1, 2024 and sell it today you would earn a total of  3,389  from holding ANI Pharmaceuticals or generate 105.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.74%
Values	Daily Returns

ANI Pharmaceuticals  vs.  Takeda Pharmaceutical Co

ANI Pharmaceuticals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANI Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, ANI Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Takeda Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Takeda Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with ANI Pharmaceuticals and Takeda Pharmaceutical

The main advantage of trading using opposite ANI Pharmaceuticals and Takeda Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANI Pharmaceuticals 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 ANI Pharmaceuticals and Takeda Pharmaceutical Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.