Correlation Between Travelers Companies and Taisho Pharmaceutical

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

By analyzing existing cross correlation between The Travelers Companies and Taisho Pharmaceutical Holdings, you can compare the effects of market volatilities on Travelers Companies and Taisho 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 Travelers Companies with a short position of Taisho Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Travelers Companies and Taisho Pharmaceutical.

Diversification Opportunities for Travelers Companies and Taisho Pharmaceutical

-0.31

Correlation Coefficient

Travelers Companies  Taisho Pharmaceutical

Very good diversification

The 3 months correlation between Travelers and Taisho is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Travelers Companies and Taisho Pharmaceutical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taisho Pharmaceutical and Travelers Companies 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 The Travelers Companies are associated (or correlated) with Taisho Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taisho Pharmaceutical has no effect on the direction of Travelers Companies i.e., Travelers Companies and Taisho Pharmaceutical go up and down completely randomly.

Pair Corralation between Travelers Companies and Taisho Pharmaceutical

If you would invest  23,875  in The Travelers Companies on September 18, 2024 and sell it today you would earn a total of  752.00  from holding The Travelers Companies or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

The Travelers Companies  vs.  Taisho Pharmaceutical Holdings

The Travelers Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Travelers Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Taisho Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taisho Pharmaceutical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Taisho Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Travelers Companies and Taisho Pharmaceutical

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

The idea behind The Travelers Companies and Taisho Pharmaceutical Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.