Correlation Between Shionogi and Barratt Developments

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

By analyzing existing cross correlation between Shionogi Co and Barratt Developments plc, you can compare the effects of market volatilities on Shionogi and Barratt Developments 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 Barratt Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shionogi and Barratt Developments.

Diversification Opportunities for Shionogi and Barratt Developments

0.5

Correlation Coefficient

Shionogi  Barratt Developments

Very weak diversification

The 3 months correlation between Shionogi and Barratt is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shionogi Co and Barratt Developments plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barratt Developments plc 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 Barratt Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barratt Developments plc has no effect on the direction of Shionogi i.e., Shionogi and Barratt Developments go up and down completely randomly.

Pair Corralation between Shionogi and Barratt Developments

Assuming the 90 days horizon Shionogi Co is expected to generate 0.6 times more return on investment than Barratt Developments. However, Shionogi Co is 1.67 times less risky than Barratt Developments. It trades about 0.07 of its potential returns per unit of risk. Barratt Developments plc is currently generating about 0.01 per unit of risk. If you would invest  1,520  in Shionogi Co on May 6, 2025 and sell it today you would earn a total of  159.00  from holding Shionogi Co or generate 10.46% return on investment over 90 days.

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

Shionogi Co  vs.  Barratt Developments plc

Shionogi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shionogi Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Shionogi may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Barratt Developments plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barratt Developments plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Barratt Developments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shionogi and Barratt Developments

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

The idea behind Shionogi Co and Barratt Developments plc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.