Correlation Between Scale All and CanSino Biologics

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

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

Diversification Opportunities for Scale All and CanSino Biologics

-0.54

Correlation Coefficient

Scale All  CanSino Biologics

Excellent diversification

The 3 months correlation between Scale and CanSino is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Scale All Share and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and Scale All 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 Scale All Share 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 Scale All i.e., Scale All and CanSino Biologics go up and down completely randomly.

Pair Corralation between Scale All and CanSino Biologics

Assuming the 90 days trading horizon Scale All Share is expected to under-perform the CanSino Biologics. But the index apears to be less risky and, when comparing its historical volatility, Scale All Share is 3.13 times less risky than CanSino Biologics. The index trades about -0.05 of its potential returns per unit of risk. The CanSino Biologics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  378.00  in CanSino Biologics on October 6, 2024 and sell it today you would earn a total of  2.00  from holding CanSino Biologics or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Scale All Share  vs.  CanSino Biologics

Pair Trading with Scale All and CanSino Biologics

The main advantage of trading using opposite Scale All and CanSino Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scale All 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 Scale All Share 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.