Correlation Between Prudential Financial and Aoxing Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both Prudential Financial and Aoxing 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 Prudential Financial and Aoxing Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Financial and Aoxing Pharmaceutical, you can compare the effects of market volatilities on Prudential Financial and Aoxing 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 Prudential Financial with a short position of Aoxing Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Financial and Aoxing Pharmaceutical.
Diversification Opportunities for Prudential Financial and Aoxing Pharmaceutical
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Prudential and Aoxing is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Financial and Aoxing Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aoxing Pharmaceutical and Prudential Financial 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 Prudential Financial are associated (or correlated) with Aoxing Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aoxing Pharmaceutical has no effect on the direction of Prudential Financial i.e., Prudential Financial and Aoxing Pharmaceutical go up and down completely randomly.
Pair Corralation between Prudential Financial and Aoxing Pharmaceutical
Considering the 90-day investment horizon Prudential Financial is expected to generate 72.8 times less return on investment than Aoxing Pharmaceutical. But when comparing it to its historical volatility, Prudential Financial is 29.95 times less risky than Aoxing Pharmaceutical. It trades about 0.04 of its potential returns per unit of risk. Aoxing Pharmaceutical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.16 in Aoxing Pharmaceutical on January 25, 2024 and sell it today you would lose (0.15) from holding Aoxing Pharmaceutical or give up 93.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 33.41% |
| Values | Daily Returns |
Prudential Financial vs. Aoxing Pharmaceutical
Performance |
| Timeline |
| Prudential Financial |
| Aoxing Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prudential Financial and Aoxing Pharmaceutical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Financial and Aoxing Pharmaceutical
The main advantage of trading using opposite Prudential Financial and Aoxing Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Financial position performs unexpectedly, Aoxing 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 Aoxing Pharmaceutical will offset losses from the drop in Aoxing Pharmaceutical's long position.| Prudential Financial vs. Lincoln National | Prudential Financial vs. Aflac Incorporated | Prudential Financial vs. Brighthouse Financial | Prudential Financial vs. Unum Group |
| Aoxing Pharmaceutical vs. Shuttle Pharmaceuticals | Aoxing Pharmaceutical vs. Lifecore Biomedical | Aoxing Pharmaceutical vs. Catalent | Aoxing Pharmaceutical vs. Lucy Scientific Discovery |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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