Correlation Between Maoming Petro and Sino Medical

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

By analyzing existing cross correlation between Maoming Petro Chemical Shihua and Sino Medical Sciences, you can compare the effects of market volatilities on Maoming Petro and Sino Medical 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 Maoming Petro with a short position of Sino Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maoming Petro and Sino Medical.

Diversification Opportunities for Maoming Petro and Sino Medical

0.32

Correlation Coefficient

Maoming Petro  Sino Medical

Weak diversification

The 3 months correlation between Maoming and Sino is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Maoming Petro Chemical Shihua and Sino Medical Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Medical Sciences and Maoming Petro 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 Maoming Petro Chemical Shihua are associated (or correlated) with Sino Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Medical Sciences has no effect on the direction of Maoming Petro i.e., Maoming Petro and Sino Medical go up and down completely randomly.

Pair Corralation between Maoming Petro and Sino Medical

Assuming the 90 days trading horizon Maoming Petro Chemical Shihua is expected to under-perform the Sino Medical. But the stock apears to be less risky and, when comparing its historical volatility, Maoming Petro Chemical Shihua is 1.52 times less risky than Sino Medical. The stock trades about -0.06 of its potential returns per unit of risk. The Sino Medical Sciences is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,009  in Sino Medical Sciences on December 24, 2024 and sell it today you would earn a total of  80.00  from holding Sino Medical Sciences or generate 7.93% return on investment over 90 days.

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

Maoming Petro Chemical Shihua  vs.  Sino Medical Sciences

Maoming Petro Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maoming Petro Chemical Shihua has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Maoming Petro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sino Medical Sciences

Risk-Adjusted Performance

Modest

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

Pair Trading with Maoming Petro and Sino Medical

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

The idea behind Maoming Petro Chemical Shihua and Sino Medical Sciences 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.