Correlation Between Shionogi and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Shionogi and Volkswagen 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 Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shionogi Co and Volkswagen AG, you can compare the effects of market volatilities on Shionogi and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shionogi and Volkswagen.
Diversification Opportunities for Shionogi and Volkswagen
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shionogi and Volkswagen is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Shionogi Co and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Shionogi i.e., Shionogi and Volkswagen go up and down completely randomly.
Pair Corralation between Shionogi and Volkswagen
Assuming the 90 days horizon Shionogi Co is expected to generate 1.1 times more return on investment than Volkswagen. However, Shionogi is 1.1 times more volatile than Volkswagen AG. It trades about -0.02 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.05 per unit of risk. If you would invest 1,587 in Shionogi Co on September 3, 2024 and sell it today you would lose (317.00) from holding Shionogi Co or give up 19.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shionogi Co vs. Volkswagen AG
Performance |
| Timeline |
| Shionogi |
| Volkswagen AG |
Shionogi and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shionogi and Volkswagen
The main advantage of trading using opposite Shionogi and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shionogi position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.The idea behind Shionogi Co and Volkswagen AG 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.| Volkswagen vs. Hemisphere Energy Corp | Volkswagen vs. Microbot Medical | Volkswagen vs. Air Lease | Volkswagen vs. Chunghwa Telecom Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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