Correlation Between Apple and Shionogi
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple and Shionogi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc and Shionogi Co, you can compare the effects of market volatilities on Apple 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 Apple with a short position of Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Shionogi.
Diversification Opportunities for Apple and Shionogi
Excellent diversification
The 3 months correlation between Apple and Shionogi is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and Apple 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 Apple Inc 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 Apple i.e., Apple and Shionogi go up and down completely randomly.
Pair Corralation between Apple and Shionogi
Assuming the 90 days trading horizon Apple Inc is expected to generate 0.54 times more return on investment than Shionogi. However, Apple Inc is 1.84 times less risky than Shionogi. It trades about 0.13 of its potential returns per unit of risk. Shionogi Co is currently generating about -0.18 per unit of risk. If you would invest 21,435 in Apple Inc on August 30, 2024 and sell it today you would earn a total of 790.00 from holding Apple Inc or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. Shionogi Co
Performance |
| Timeline |
| Apple Inc |
| Shionogi |
Apple and Shionogi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Shionogi
The main advantage of trading using opposite Apple and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. Tsingtao Brewery | Apple vs. United Rentals | Apple vs. ALBIS LEASING AG | Apple vs. Lendlease Group |
| Shionogi vs. Superior Plus Corp | Shionogi vs. NMI Holdings | Shionogi vs. SIVERS SEMICONDUCTORS AB | Shionogi vs. Talanx AG |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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