Correlation Between CHINA VANKE and Shionogi

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

By analyzing existing cross correlation between CHINA VANKE TD and Shionogi Co, you can compare the effects of market volatilities on CHINA VANKE and Shionogi 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 CHINA VANKE with a short position of Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA VANKE and Shionogi.

Diversification Opportunities for CHINA VANKE and Shionogi

-0.34

Correlation Coefficient

CHINA VANKE  Shionogi

Very good diversification

The 3 months correlation between CHINA and Shionogi is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CHINA VANKE TD and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and CHINA VANKE 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 CHINA VANKE TD are associated (or correlated) with Shionogi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shionogi has no effect on the direction of CHINA VANKE i.e., CHINA VANKE and Shionogi go up and down completely randomly.

Pair Corralation between CHINA VANKE and Shionogi

Assuming the 90 days horizon CHINA VANKE is expected to generate 1.41 times less return on investment than Shionogi. In addition to that, CHINA VANKE is 6.13 times more volatile than Shionogi Co. It trades about 0.01 of its total potential returns per unit of risk. Shionogi Co is currently generating about 0.06 per unit of volatility. If you would invest  1,260  in Shionogi Co on September 27, 2024 and sell it today you would earn a total of  70.00  from holding Shionogi Co or generate 5.56% return on investment over 90 days.

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

CHINA VANKE TD  vs.  Shionogi Co

CHINA VANKE TD

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CHINA VANKE TD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CHINA VANKE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Shionogi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Shionogi is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CHINA VANKE and Shionogi

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

The idea behind CHINA VANKE TD and Shionogi Co 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.