Correlation Between Takeda Pharmaceutical and Oculis Holding

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

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

Diversification Opportunities for Takeda Pharmaceutical and Oculis Holding

-0.68

Correlation Coefficient

Takeda Pharmaceutical  Oculis Holding

Excellent diversification

The 3 months correlation between Takeda and Oculis is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Takeda Pharmaceutical Co and Oculis Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oculis Holding AG and Takeda Pharmaceutical 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 Takeda Pharmaceutical Co are associated (or correlated) with Oculis Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oculis Holding AG has no effect on the direction of Takeda Pharmaceutical i.e., Takeda Pharmaceutical and Oculis Holding go up and down completely randomly.

Pair Corralation between Takeda Pharmaceutical and Oculis Holding

Considering the 90-day investment horizon Takeda Pharmaceutical Co is expected to under-perform the Oculis Holding. But the stock apears to be less risky and, when comparing its historical volatility, Takeda Pharmaceutical Co is 3.82 times less risky than Oculis Holding. The stock trades about -0.12 of its potential returns per unit of risk. The Oculis Holding AG is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Oculis Holding AG on August 31, 2024 and sell it today you would earn a total of  416.00  from holding Oculis Holding AG or generate 34.67% return on investment over 90 days.

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

Takeda Pharmaceutical Co  vs.  Oculis Holding AG

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 unsteady 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.

Oculis Holding AG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oculis Holding AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Oculis Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Takeda Pharmaceutical and Oculis Holding

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

The idea behind Takeda Pharmaceutical Co and Oculis Holding AG 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.