Correlation Between Horizon Therapeutics and LINGYI ITECH

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Can any of the company-specific risk be diversified away by investing in both Horizon Therapeutics and LINGYI ITECH 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 Horizon Therapeutics and LINGYI ITECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Therapeutics and LINGYI ITECH GUAN, you can compare the effects of market volatilities on Horizon Therapeutics and LINGYI ITECH 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 Horizon Therapeutics with a short position of LINGYI ITECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Therapeutics and LINGYI ITECH.

Diversification Opportunities for Horizon Therapeutics and LINGYI ITECH

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Horizon and LINGYI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Therapeutics and LINGYI ITECH GUAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINGYI ITECH GUAN and Horizon Therapeutics 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 Horizon Therapeutics are associated (or correlated) with LINGYI ITECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINGYI ITECH GUAN has no effect on the direction of Horizon Therapeutics i.e., Horizon Therapeutics and LINGYI ITECH go up and down completely randomly.

Pair Corralation between Horizon Therapeutics and LINGYI ITECH

Given the investment horizon of 90 days Horizon Therapeutics is expected to generate 0.85 times more return on investment than LINGYI ITECH. However, Horizon Therapeutics is 1.18 times less risky than LINGYI ITECH. It trades about -0.07 of its potential returns per unit of risk. LINGYI ITECH GUAN is currently generating about -0.06 per unit of risk. If you would invest  10,596  in Horizon Therapeutics on July 2, 2022 and sell it today you would lose (4,327)  from holding Horizon Therapeutics or give up 40.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy79.04%
ValuesDaily Returns

Horizon Therapeutics  vs.  LINGYI ITECH GUAN

 Performance (%) 
       Timeline  
Horizon Therapeutics 
Horizon Performance
0 of 100
Over the last 90 days Horizon Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in October 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Horizon Price Channel

LINGYI ITECH GUAN 
LINGYI Performance
0 of 100
Over the last 90 days LINGYI ITECH GUAN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LINGYI ITECH is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

LINGYI Price Channel

Horizon Therapeutics and LINGYI ITECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Horizon Therapeutics and LINGYI ITECH

The main advantage of trading using opposite Horizon Therapeutics and LINGYI ITECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Therapeutics position performs unexpectedly, LINGYI ITECH 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 LINGYI ITECH will offset losses from the drop in LINGYI ITECH's long position.
Horizon Therapeutics vs. Amazon Inc
The idea behind Horizon Therapeutics and LINGYI ITECH GUAN 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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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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