Correlation Between AstraZeneca PLC and Beowulf Mining

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

By analyzing existing cross correlation between AstraZeneca PLC and Beowulf Mining PLC, you can compare the effects of market volatilities on AstraZeneca PLC and Beowulf Mining 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 Beowulf Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Beowulf Mining.

Diversification Opportunities for AstraZeneca PLC and Beowulf Mining

0.77

Correlation Coefficient

AstraZeneca PLC  Beowulf Mining

Poor diversification

The 3 months correlation between AstraZeneca and Beowulf is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Beowulf Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beowulf Mining PLC 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 are associated (or correlated) with Beowulf Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beowulf Mining PLC has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Beowulf Mining go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Beowulf Mining

Assuming the 90 days trading horizon AstraZeneca PLC is expected to generate 0.47 times more return on investment than Beowulf Mining. However, AstraZeneca PLC is 2.13 times less risky than Beowulf Mining. It trades about -0.09 of its potential returns per unit of risk. Beowulf Mining PLC is currently generating about -0.28 per unit of risk. If you would invest  162,800  in AstraZeneca PLC on September 12, 2024 and sell it today you would lose (15,250) from holding AstraZeneca PLC or give up 9.37% of portfolio value over 90 days.

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

AstraZeneca PLC  vs.  Beowulf Mining PLC

AstraZeneca PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AstraZeneca PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Beowulf Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beowulf Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with AstraZeneca PLC and Beowulf Mining

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

The idea behind AstraZeneca PLC and Beowulf Mining PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.