Correlation Between Eisai and Shionogi
Can any of the company-specific risk be diversified away by investing in both Eisai 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 Eisai and Shionogi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eisai Co and Shionogi Co, you can compare the effects of market volatilities on Eisai 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 Eisai with a short position of Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai and Shionogi.
Diversification Opportunities for Eisai and Shionogi
Poor diversification
The 3 months correlation between Eisai and Shionogi is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and Shionogi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and Eisai 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 Eisai Co 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 Eisai i.e., Eisai and Shionogi go up and down completely randomly.
Pair Corralation between Eisai and Shionogi
Assuming the 90 days horizon Eisai Co is expected to generate 1.59 times more return on investment than Shionogi. However, Eisai is 1.59 times more volatile than Shionogi Co. It trades about -0.05 of its potential returns per unit of risk. Shionogi Co is currently generating about -0.18 per unit of risk. If you would invest 3,123 in Eisai Co on August 30, 2024 and sell it today you would lose (177.00) from holding Eisai Co or give up 5.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eisai Co vs. Shionogi Co
Performance |
| Timeline |
| Eisai |
| Shionogi |
Eisai and Shionogi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eisai and Shionogi
The main advantage of trading using opposite Eisai and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai 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.| Eisai vs. Superior Plus Corp | Eisai vs. NMI Holdings | Eisai vs. SIVERS SEMICONDUCTORS AB | Eisai vs. Talanx AG |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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