Correlation Between BANK CENTRAL and Shionogi

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

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

Diversification Opportunities for BANK CENTRAL and Shionogi

-0.49

Correlation Coefficient

BANK CENTRAL  Shionogi

Very good diversification

The 3 months correlation between BANK and Shionogi is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BANK CENTRAL ASIA and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and BANK CENTRAL 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 BANK CENTRAL ASIA 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 BANK CENTRAL i.e., BANK CENTRAL and Shionogi go up and down completely randomly.

Pair Corralation between BANK CENTRAL and Shionogi

Assuming the 90 days trading horizon BANK CENTRAL ASIA is expected to under-perform the Shionogi. In addition to that, BANK CENTRAL is 1.51 times more volatile than Shionogi Co. It trades about -0.15 of its total potential returns per unit of risk. Shionogi Co is currently generating about 0.08 per unit of volatility. If you would invest  1,240  in Shionogi Co on September 1, 2024 and sell it today you would earn a total of  30.00  from holding Shionogi Co or generate 2.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

BANK CENTRAL ASIA  vs.  Shionogi Co

BANK CENTRAL ASIA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANK CENTRAL ASIA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BANK CENTRAL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BANK CENTRAL and Shionogi

The main advantage of trading using opposite BANK CENTRAL and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK CENTRAL 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 BANK CENTRAL ASIA 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.