Correlation Between BANK HANDLOWY and Shionogi

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

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

Diversification Opportunities for BANK HANDLOWY and Shionogi

0.43

Correlation Coefficient

BANK HANDLOWY  Shionogi

Very weak diversification

The 3 months correlation between BANK and Shionogi is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and BANK HANDLOWY 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 HANDLOWY 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 HANDLOWY i.e., BANK HANDLOWY and Shionogi go up and down completely randomly.

Pair Corralation between BANK HANDLOWY and Shionogi

Assuming the 90 days trading horizon BANK HANDLOWY is expected to generate 1.48 times less return on investment than Shionogi. But when comparing it to its historical volatility, BANK HANDLOWY is 1.7 times less risky than Shionogi. It trades about 0.23 of its potential returns per unit of risk. Shionogi Co is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,240  in Shionogi Co on September 15, 2024 and sell it today you would earn a total of  70.00  from holding Shionogi Co or generate 5.65% return on investment over 90 days.

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

BANK HANDLOWY  vs.  Shionogi Co

BANK HANDLOWY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK HANDLOWY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BANK HANDLOWY is not utilizing all of its potentials. The newest 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 HANDLOWY and Shionogi

The main advantage of trading using opposite BANK HANDLOWY and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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 HANDLOWY 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.