Correlation Between RETAIL FOOD and Shionogi

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

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

Diversification Opportunities for RETAIL FOOD and Shionogi

0.05

Correlation Coefficient

RETAIL FOOD  Shionogi

Significant diversification

The 3 months correlation between RETAIL and Shionogi is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Shionogi go up and down completely randomly.

Pair Corralation between RETAIL FOOD and Shionogi

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Shionogi. In addition to that, RETAIL FOOD is 1.36 times more volatile than Shionogi Co. It trades about -0.07 of its total potential returns per unit of risk. Shionogi Co is currently generating about 0.07 per unit of volatility. If you would invest  1,180  in Shionogi Co on September 30, 2024 and sell it today you would earn a total of  150.00  from holding Shionogi Co or generate 12.71% return on investment over 90 days.

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

RETAIL FOOD GROUP  vs.  Shionogi Co

RETAIL FOOD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, RETAIL FOOD is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Shionogi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Shionogi is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RETAIL FOOD and Shionogi

The main advantage of trading using opposite RETAIL FOOD and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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 RETAIL FOOD GROUP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.