Correlation Between Shionogi and Richter Gedeon

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

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

Diversification Opportunities for Shionogi and Richter Gedeon

-0.12

Correlation Coefficient

Shionogi  Richter Gedeon

Good diversification

The 3 months correlation between Shionogi and Richter is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shionogi Co and Richter Gedeon Vegyszeti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Richter Gedeon Vegyszeti 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 Richter Gedeon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Richter Gedeon Vegyszeti has no effect on the direction of Shionogi i.e., Shionogi and Richter Gedeon go up and down completely randomly.

Pair Corralation between Shionogi and Richter Gedeon

Assuming the 90 days horizon Shionogi Co is expected to under-perform the Richter Gedeon. But the stock apears to be less risky and, when comparing its historical volatility, Shionogi Co is 1.15 times less risky than Richter Gedeon. The stock trades about -0.01 of its potential returns per unit of risk. The Richter Gedeon Vegyszeti is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,224  in Richter Gedeon Vegyszeti on September 13, 2024 and sell it today you would earn a total of  440.00  from holding Richter Gedeon Vegyszeti or generate 19.78% return on investment over 90 days.

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

Shionogi Co  vs.  Richter Gedeon Vegyszeti

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.

Richter Gedeon Vegyszeti

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shionogi and Richter Gedeon

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

The idea behind Shionogi Co and Richter Gedeon Vegyszeti 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.