Correlation Between DO Home and Cansino Biologics

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

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

Diversification Opportunities for DO Home and Cansino Biologics

0.73

Correlation Coefficient

DO Home  Cansino Biologics

Poor diversification

The 3 months correlation between 002798 and Cansino is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DO Home Collection and Cansino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cansino Biologics and DO Home 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 DO Home Collection are associated (or correlated) with Cansino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cansino Biologics has no effect on the direction of DO Home i.e., DO Home and Cansino Biologics go up and down completely randomly.

Pair Corralation between DO Home and Cansino Biologics

Assuming the 90 days trading horizon DO Home Collection is expected to under-perform the Cansino Biologics. In addition to that, DO Home is 1.07 times more volatile than Cansino Biologics. It trades about -0.04 of its total potential returns per unit of risk. Cansino Biologics is currently generating about 0.03 per unit of volatility. If you would invest  5,737  in Cansino Biologics on October 26, 2024 and sell it today you would earn a total of  138.00  from holding Cansino Biologics or generate 2.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

DO Home Collection  vs.  Cansino Biologics

DO Home Collection

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DO Home Collection has generated negative risk-adjusted returns adding no value to investors with long positions. Despite 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.

Cansino Biologics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cansino Biologics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cansino Biologics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DO Home and Cansino Biologics

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

The idea behind DO Home Collection and Cansino Biologics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.