Correlation Between Shionogi and Invion

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

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

Diversification Opportunities for Shionogi and Invion

0.24

Correlation Coefficient

Shionogi  Invion

Modest diversification

The 3 months correlation between Shionogi and Invion is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Shionogi Co and Invion Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invion Limited and Shionogi 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 Shionogi Co are associated (or correlated) with Invion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invion Limited has no effect on the direction of Shionogi i.e., Shionogi and Invion go up and down completely randomly.

Pair Corralation between Shionogi and Invion

Assuming the 90 days horizon Shionogi Co is expected to under-perform the Invion. But the stock apears to be less risky and, when comparing its historical volatility, Shionogi Co is 40.0 times less risky than Invion. The stock trades about -0.02 of its potential returns per unit of risk. The Invion Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Invion Limited on September 21, 2024 and sell it today you would earn a total of  0.00  from holding Invion Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Shionogi Co  vs.  Invion Limited

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Invion Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invion Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shionogi and Invion

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

The idea behind Shionogi Co and Invion Limited 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.