Correlation Between Shionogi and PULSION Medical

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

By analyzing existing cross correlation between Shionogi Co and PULSION Medical Systems, you can compare the effects of market volatilities on Shionogi and PULSION Medical 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 PULSION Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shionogi and PULSION Medical.

Diversification Opportunities for Shionogi and PULSION Medical

0.09

Correlation Coefficient

Shionogi  PULSION Medical

Significant diversification

The 3 months correlation between Shionogi and PULSION is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shionogi Co and PULSION Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PULSION Medical Systems 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 PULSION Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PULSION Medical Systems has no effect on the direction of Shionogi i.e., Shionogi and PULSION Medical go up and down completely randomly.

Pair Corralation between Shionogi and PULSION Medical

Assuming the 90 days horizon Shionogi Co is expected to generate 3.84 times more return on investment than PULSION Medical. However, Shionogi is 3.84 times more volatile than PULSION Medical Systems. It trades about 0.07 of its potential returns per unit of risk. PULSION Medical Systems is currently generating about 0.03 per unit of risk. If you would invest  1,190  in Shionogi Co on October 23, 2024 and sell it today you would earn a total of  130.00  from holding Shionogi Co or generate 10.92% return on investment over 90 days.

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

Shionogi Co  vs.  PULSION Medical Systems

Shionogi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shionogi reported solid returns over the last few months and may actually be approaching a breakup point.

PULSION Medical Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PULSION Medical 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 Shionogi and PULSION Medical

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

The idea behind Shionogi Co and PULSION Medical Systems 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.