Correlation Between China SXT and Shionogi

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

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

Diversification Opportunities for China SXT and Shionogi

0.57

Correlation Coefficient

China SXT  Shionogi

Very weak diversification

The 3 months correlation between China and Shionogi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China SXT Pharmaceuticals and Shionogi Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and China SXT 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 SXT Pharmaceuticals 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 SXT i.e., China SXT and Shionogi go up and down completely randomly.

Pair Corralation between China SXT and Shionogi

Given the investment horizon of 90 days China SXT Pharmaceuticals is expected to under-perform the Shionogi. In addition to that, China SXT is 5.43 times more volatile than Shionogi Co Ltd. It trades about -0.07 of its total potential returns per unit of risk. Shionogi Co Ltd is currently generating about -0.15 per unit of volatility. If you would invest  779.00  in Shionogi Co Ltd on August 30, 2024 and sell it today you would lose (84.00) from holding Shionogi Co Ltd or give up 10.78% of portfolio value over 90 days.

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

China SXT Pharmaceuticals  vs.  Shionogi Co Ltd

China SXT Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China SXT Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shionogi Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with China SXT and Shionogi

The main advantage of trading using opposite China SXT and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China SXT 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 SXT Pharmaceuticals and Shionogi Co Ltd 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.