Correlation Between ANI Pharmaceuticals and Teva Pharmaceutical

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

By analyzing existing cross correlation between ANI Pharmaceuticals and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on ANI Pharmaceuticals and Teva 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 ANI Pharmaceuticals with a short position of Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANI Pharmaceuticals and Teva Pharmaceutical.

Diversification Opportunities for ANI Pharmaceuticals and Teva Pharmaceutical

0.12

Correlation Coefficient

ANI Pharmaceuticals  Teva Pharmaceutical

Average diversification

The 3 months correlation between ANI and Teva is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ANI Pharmaceuticals and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical and ANI Pharmaceuticals 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 ANI Pharmaceuticals are associated (or correlated) with Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of ANI Pharmaceuticals i.e., ANI Pharmaceuticals and Teva Pharmaceutical go up and down completely randomly.

Pair Corralation between ANI Pharmaceuticals and Teva Pharmaceutical

Given the investment horizon of 90 days ANI Pharmaceuticals is expected to generate 2.01 times less return on investment than Teva Pharmaceutical. But when comparing it to its historical volatility, ANI Pharmaceuticals is 1.62 times less risky than Teva Pharmaceutical. It trades about 0.06 of its potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  804.00  in Teva Pharmaceutical Industries on January 31, 2024 and sell it today you would earn a total of  371.00  from holding Teva Pharmaceutical Industries or generate 46.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.46%
Values	Daily Returns

ANI Pharmaceuticals  vs.  Teva Pharmaceutical Industries

ANI Pharmaceuticals

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANI Pharmaceuticals are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, ANI Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Teva Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teva Pharmaceutical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ANI Pharmaceuticals and Teva Pharmaceutical

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

The idea behind ANI Pharmaceuticals and Teva Pharmaceutical Industries 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.