Correlation Between GLG LIFE and Shionogi

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

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

Diversification Opportunities for GLG LIFE and Shionogi

0.0

Correlation Coefficient

GLG LIFE  Shionogi

Pay attention - limited upside

The 3 months correlation between GLG and Shionogi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and GLG LIFE 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 GLG LIFE TECH 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 GLG LIFE i.e., GLG LIFE and Shionogi go up and down completely randomly.

Pair Corralation between GLG LIFE and Shionogi

Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 27.15 times more return on investment than Shionogi. However, GLG LIFE is 27.15 times more volatile than Shionogi Co. It trades about 0.06 of its potential returns per unit of risk. Shionogi Co is currently generating about -0.01 per unit of risk. If you would invest  1.40  in GLG LIFE TECH on October 4, 2024 and sell it today you would earn a total of  0.60  from holding GLG LIFE TECH or generate 42.86% return on investment over 90 days.

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

GLG LIFE TECH  vs.  Shionogi Co

GLG LIFE TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE 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

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 GLG LIFE and Shionogi

The main advantage of trading using opposite GLG LIFE and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE 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 GLG LIFE TECH 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.