Correlation Between Dynavax Technologies and Shionogi

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

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

Diversification Opportunities for Dynavax Technologies and Shionogi

0.83

Correlation Coefficient

Dynavax Technologies  Shionogi

Very poor diversification

The 3 months correlation between Dynavax and Shionogi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dynavax Technologies and Shionogi Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and Dynavax Technologies 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 Dynavax Technologies 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 Dynavax Technologies i.e., Dynavax Technologies and Shionogi go up and down completely randomly.

Pair Corralation between Dynavax Technologies and Shionogi

Given the investment horizon of 90 days Dynavax Technologies is expected to generate 1.38 times less return on investment than Shionogi. But when comparing it to its historical volatility, Dynavax Technologies is 1.36 times less risky than Shionogi. It trades about 0.08 of its potential returns per unit of risk. Shionogi Co Ltd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  697.00  in Shionogi Co Ltd on December 30, 2024 and sell it today you would earn a total of  62.00  from holding Shionogi Co Ltd or generate 8.9% return on investment over 90 days.

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

Dynavax Technologies  vs.  Shionogi Co Ltd

Dynavax Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dynavax Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dynavax Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Shionogi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Shionogi may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dynavax Technologies and Shionogi

The main advantage of trading using opposite Dynavax Technologies and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynavax Technologies 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 Dynavax Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.