Can any of the company-specific risk be diversified away by investing in both Sunshine Biopharma and Dynavax Technologies 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 Sunshine Biopharma and Dynavax Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunshine Biopharma and Dynavax Technologies, you can compare the effects of market volatilities on Sunshine Biopharma and Dynavax Technologies 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 Sunshine Biopharma with a short position of Dynavax Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunshine Biopharma and Dynavax Technologies.
Diversification Opportunities for Sunshine Biopharma and Dynavax Technologies
The 3 months correlation between Sunshine and Dynavax is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunshine Biopharma and Dynavax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynavax Technologies and Sunshine Biopharma 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 Sunshine Biopharma are associated (or correlated) with Dynavax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynavax Technologies has no effect on the direction of Sunshine Biopharma i.e., Sunshine Biopharma and Dynavax Technologies go up and down completely randomly.
Pair Corralation between Sunshine Biopharma and Dynavax Technologies
Given the investment horizon of 90 days Sunshine Biopharma is expected to under-perform the Dynavax Technologies. In addition to that, Sunshine Biopharma is 2.52 times more volatile than Dynavax Technologies. It trades about -0.43 of its total potential returns per unit of risk. Dynavax Technologies is currently generating about 0.13 per unit of volatility. If you would invest 1,164 in Dynavax Technologies on March 6, 2024 and sell it today you would earn a total of 68.00 from holding Dynavax Technologies or generate 5.84% return on investment over 90 days.
Over the last 90 days Sunshine Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
Over the last 90 days Dynavax Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dynavax Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.