Correlation Between CanSino Biologics and Shionogi

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

By analyzing existing cross correlation between CanSino Biologics and Shionogi Co Ltd, you can compare the effects of market volatilities on CanSino Biologics 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 CanSino Biologics with a short position of Shionogi. Check out your portfolio center. Please also check ongoing floating volatility patterns of CanSino Biologics and Shionogi.

Diversification Opportunities for CanSino Biologics and Shionogi

0.3

Correlation Coefficient

CanSino Biologics  Shionogi

Weak diversification

The 3 months correlation between CanSino and Shionogi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and Shionogi Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shionogi and CanSino Biologics 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 CanSino Biologics 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 CanSino Biologics i.e., CanSino Biologics and Shionogi go up and down completely randomly.

Pair Corralation between CanSino Biologics and Shionogi

Assuming the 90 days horizon CanSino Biologics is expected to generate 3.45 times more return on investment than Shionogi. However, CanSino Biologics is 3.45 times more volatile than Shionogi Co Ltd. It trades about -0.06 of its potential returns per unit of risk. Shionogi Co Ltd is currently generating about -0.51 per unit of risk. If you would invest  223.00  in CanSino Biologics on January 20, 2024 and sell it today you would lose (13.00) from holding CanSino Biologics or give up 5.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

CanSino Biologics  vs.  Shionogi Co Ltd

CanSino Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shionogi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shionogi Co Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CanSino Biologics and Shionogi

The main advantage of trading using opposite CanSino Biologics and Shionogi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CanSino Biologics 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.

The idea behind CanSino Biologics and Shionogi Co Ltd 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.