Correlation Between Insteel Industries and SHIONOGI

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

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

Diversification Opportunities for Insteel Industries and SHIONOGI

-0.09

Correlation Coefficient

Insteel Industries  SHIONOGI

Good diversification

The 3 months correlation between Insteel and SHIONOGI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Insteel Industries and SHIONOGI LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIONOGI LTD and Insteel Industries 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 Insteel Industries 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 LTD has no effect on the direction of Insteel Industries i.e., Insteel Industries and SHIONOGI go up and down completely randomly.

Pair Corralation between Insteel Industries and SHIONOGI

Assuming the 90 days horizon Insteel Industries is expected to generate 2.0 times less return on investment than SHIONOGI. In addition to that, Insteel Industries is 1.25 times more volatile than SHIONOGI LTD . It trades about 0.03 of its total potential returns per unit of risk. SHIONOGI LTD is currently generating about 0.09 per unit of volatility. If you would invest  1,190  in SHIONOGI LTD on October 25, 2024 and sell it today you would earn a total of  100.00  from holding SHIONOGI LTD or generate 8.4% return on investment over 90 days.

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

Insteel Industries  vs.  SHIONOGI LTD

Insteel Industries

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Insteel Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Insteel Industries is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SHIONOGI LTD

Risk-Adjusted Performance

6 of 100

OK

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

Pair Trading with Insteel Industries and SHIONOGI

The main advantage of trading using opposite Insteel Industries and SHIONOGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insteel Industries 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 Insteel Industries and SHIONOGI 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..