Correlation Between Dynavax Technologies and Sunshine Biopharma

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

By analyzing existing cross correlation between Dynavax Technologies and Sunshine Biopharma, you can compare the effects of market volatilities on Dynavax Technologies and Sunshine Biopharma 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 Dynavax Technologies with a short position of Sunshine Biopharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynavax Technologies and Sunshine Biopharma.

Diversification Opportunities for Dynavax Technologies and Sunshine Biopharma

0.63

Correlation Coefficient

Dynavax Technologies  Sunshine Biopharma

Poor diversification

The 3 months correlation between Dynavax and Sunshine is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dynavax Technologies and Sunshine Biopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunshine Biopharma and Dynavax Technologies 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 Dynavax Technologies are associated (or correlated) with Sunshine Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunshine Biopharma has no effect on the direction of Dynavax Technologies i.e., Dynavax Technologies and Sunshine Biopharma go up and down completely randomly.

Pair Corralation between Dynavax Technologies and Sunshine Biopharma

Given the investment horizon of 90 days Dynavax Technologies is expected to generate 0.31 times more return on investment than Sunshine Biopharma. However, Dynavax Technologies is 3.23 times less risky than Sunshine Biopharma. It trades about 0.04 of its potential returns per unit of risk. Sunshine Biopharma is currently generating about -0.14 per unit of risk. If you would invest  1,168  in Dynavax Technologies on March 2, 2024 and sell it today you would earn a total of  14.00  from holding Dynavax Technologies or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dynavax Technologies  vs.  Sunshine Biopharma

Dynavax Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynavax Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Sunshine Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunshine Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent 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.

Pair Trading with Dynavax Technologies and Sunshine Biopharma

The main advantage of trading using opposite Dynavax Technologies and Sunshine Biopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynavax Technologies position performs unexpectedly, Sunshine Biopharma 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 Sunshine Biopharma will offset losses from the drop in Sunshine Biopharma's long position.

The idea behind Dynavax Technologies and Sunshine Biopharma 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.