Correlation Between Sunshine Biopharma and Dynavax Technologies

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

0.5

Correlation Coefficient

Sunshine Biopharma  Dynavax Technologies

Very weak diversification

The 3 months correlation between Sunshine and Dynavax is 0.5. 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 8.74 times more volatile than Dynavax Technologies. It trades about -0.11 of its total potential returns per unit of risk. Dynavax Technologies is currently generating about -0.07 per unit of volatility. If you would invest  1,392  in Dynavax Technologies on March 2, 2024 and sell it today you would lose (210.00) from holding Dynavax Technologies or give up 15.09% of portfolio value over 90 days.

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

Sunshine Biopharma  vs.  Dynavax Technologies

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 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.

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.

Pair Trading with Sunshine Biopharma and Dynavax Technologies

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

The idea behind Sunshine Biopharma and Dynavax Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.