Correlation Between AstraZeneca PLC and DarioHealth Corp

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

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

Diversification Opportunities for AstraZeneca PLC and DarioHealth Corp

-0.06

Correlation Coefficient

AstraZeneca PLC  DarioHealth Corp

Good diversification

The 3 months correlation between AstraZeneca and DarioHealth is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC ADR and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp 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 ADR are associated (or correlated) with DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and DarioHealth Corp go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and DarioHealth Corp

Considering the 90-day investment horizon AstraZeneca PLC ADR is expected to generate 0.25 times more return on investment than DarioHealth Corp. However, AstraZeneca PLC ADR is 4.01 times less risky than DarioHealth Corp. It trades about 0.04 of its potential returns per unit of risk. DarioHealth Corp is currently generating about -0.02 per unit of risk. If you would invest  6,292  in AstraZeneca PLC ADR on February 23, 2024 and sell it today you would earn a total of  1,526  from holding AstraZeneca PLC ADR or generate 24.25% return on investment over 90 days.

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

AstraZeneca PLC ADR  vs.  DarioHealth Corp

AstraZeneca PLC ADR

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AstraZeneca PLC ADR are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, AstraZeneca PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AstraZeneca PLC and DarioHealth Corp

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

The idea behind AstraZeneca PLC ADR and DarioHealth Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.