Correlation Between Horizon Therapeutics and Continental

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

Diversification Opportunities for Horizon Therapeutics and Continental

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Horizon and Continental is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Therapeutics and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Horizon Therapeutics i.e., Horizon Therapeutics and Continental go up and down completely randomly.

Pair Corralation between Horizon Therapeutics and Continental

Given the investment horizon of 90 days Horizon Therapeutics is expected to generate 0.68 times more return on investment than Continental. However, Horizon Therapeutics is 1.48 times less risky than Continental. It trades about 0.16 of its potential returns per unit of risk. Caleres is currently generating about -0.08 per unit of risk. If you would invest  5,950  in Horizon Therapeutics on June 30, 2022 and sell it today you would earn a total of  434.00  from holding Horizon Therapeutics or generate 7.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Horizon Therapeutics  vs.  Caleres

 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 weak 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

Continental 
Continental Performance
0 of 100
Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Continental is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Continental Price Channel

Horizon Therapeutics and Continental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Horizon Therapeutics and Continental

The main advantage of trading using opposite Horizon Therapeutics and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Therapeutics position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.
Horizon Therapeutics vs. Kibush Capital Corp
The idea behind Horizon Therapeutics and Caleres 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.
Continental vs. Kibush Capital Corp
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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