Correlation Between Daiichi Sankyo and Supernova Energy

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

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

Diversification Opportunities for Daiichi Sankyo and Supernova Energy

0.58

Correlation Coefficient

Daiichi Sankyo  Supernova Energy

Very weak diversification

The 3 months correlation between Daiichi and Supernova is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Daiichi Sankyo and Supernova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernova Energy and Daiichi Sankyo 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 Daiichi Sankyo are associated (or correlated) with Supernova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernova Energy has no effect on the direction of Daiichi Sankyo i.e., Daiichi Sankyo and Supernova Energy go up and down completely randomly.

Pair Corralation between Daiichi Sankyo and Supernova Energy

Assuming the 90 days horizon Daiichi Sankyo is expected to under-perform the Supernova Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Daiichi Sankyo is 1.29 times less risky than Supernova Energy. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Supernova Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Supernova Energy on December 5, 2024 and sell it today you would lose (0.01) from holding Supernova Energy or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.6%
Values	Daily Returns

Daiichi Sankyo  vs.  Supernova Energy

Daiichi Sankyo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daiichi Sankyo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Supernova Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Supernova Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Daiichi Sankyo and Supernova Energy

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

The idea behind Daiichi Sankyo and Supernova Energy 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 Commodity Directory module to find actively traded commodities issued by global exchanges.