Correlation Between Church Dwight and Estrella Immunopharma

Can any of the company-specific risk be diversified away by investing in both Church Dwight and Estrella Immunopharma 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 Church Dwight and Estrella Immunopharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Church Dwight and Estrella Immunopharma, you can compare the effects of market volatilities on Church Dwight and Estrella Immunopharma 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 Church Dwight with a short position of Estrella Immunopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Church Dwight and Estrella Immunopharma.

Diversification Opportunities for Church Dwight and Estrella Immunopharma

0.29

Correlation Coefficient

Church Dwight  Estrella Immunopharma

Modest diversification

The 3 months correlation between Church and Estrella is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Church Dwight and Estrella Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estrella Immunopharma and Church Dwight 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 Church Dwight are associated (or correlated) with Estrella Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estrella Immunopharma has no effect on the direction of Church Dwight i.e., Church Dwight and Estrella Immunopharma go up and down completely randomly.

Pair Corralation between Church Dwight and Estrella Immunopharma

Considering the 90-day investment horizon Church Dwight is expected to generate 199.29 times less return on investment than Estrella Immunopharma. But when comparing it to its historical volatility, Church Dwight is 31.16 times less risky than Estrella Immunopharma. It trades about 0.03 of its potential returns per unit of risk. Estrella Immunopharma is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6.06  in Estrella Immunopharma on September 13, 2024 and sell it today you would earn a total of  3.04  from holding Estrella Immunopharma or generate 50.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

Church Dwight  vs.  Estrella Immunopharma

Church Dwight

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Church Dwight is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Estrella Immunopharma

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Estrella Immunopharma are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Estrella Immunopharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Church Dwight and Estrella Immunopharma

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

The idea behind Church Dwight and Estrella Immunopharma 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.