Correlation Between Ono Pharmaceutical and Santen Pharmaceutical

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

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

Diversification Opportunities for Ono Pharmaceutical and Santen Pharmaceutical

0.49

Correlation Coefficient

Ono Pharmaceutical  Santen Pharmaceutical

Very weak diversification

The 3 months correlation between Ono and Santen is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ono Pharmaceutical Co and Santen Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santen Pharmaceutical and Ono Pharmaceutical 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 Ono Pharmaceutical Co are associated (or correlated) with Santen Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santen Pharmaceutical has no effect on the direction of Ono Pharmaceutical i.e., Ono Pharmaceutical and Santen Pharmaceutical go up and down completely randomly.

Pair Corralation between Ono Pharmaceutical and Santen Pharmaceutical

Assuming the 90 days horizon Ono Pharmaceutical Co is expected to under-perform the Santen Pharmaceutical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ono Pharmaceutical Co is 1.41 times less risky than Santen Pharmaceutical. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Santen Pharmaceutical Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,109  in Santen Pharmaceutical Co on September 14, 2024 and sell it today you would lose (56.00) from holding Santen Pharmaceutical Co or give up 5.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Ono Pharmaceutical Co  vs.  Santen Pharmaceutical Co

Ono Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ono Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Santen Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santen Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Santen Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ono Pharmaceutical and Santen Pharmaceutical

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

The idea behind Ono Pharmaceutical Co and Santen Pharmaceutical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..