Correlation Between AstraZeneca PLC and CSPC Pharmaceutical

Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and CSPC 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 AstraZeneca PLC and CSPC Pharmaceutical 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 CSPC Pharmaceutical Group, you can compare the effects of market volatilities on AstraZeneca PLC and CSPC 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 AstraZeneca PLC with a short position of CSPC Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and CSPC Pharmaceutical.

Diversification Opportunities for AstraZeneca PLC and CSPC Pharmaceutical

-0.7

Correlation Coefficient

AstraZeneca PLC  CSPC Pharmaceutical

Excellent diversification

The 3 months correlation between AstraZeneca and CSPC is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and CSPC Pharmaceutical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC Pharmaceutical 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 CSPC Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC Pharmaceutical has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and CSPC Pharmaceutical go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and CSPC Pharmaceutical

If you would invest  6,745  in AstraZeneca PLC ADR on February 5, 2024 and sell it today you would earn a total of  890.00  from holding AstraZeneca PLC ADR or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

AstraZeneca PLC ADR  vs.  CSPC Pharmaceutical Group

AstraZeneca PLC ADR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, AstraZeneca PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

CSPC Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSPC Pharmaceutical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CSPC Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AstraZeneca PLC and CSPC Pharmaceutical

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

The idea behind AstraZeneca PLC ADR and CSPC Pharmaceutical Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.