Correlation Between China Metal and SynCore Biotechnology

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

By analyzing existing cross correlation between China Metal Products and SynCore Biotechnology Co, you can compare the effects of market volatilities on China Metal and SynCore Biotechnology 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 China Metal with a short position of SynCore Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and SynCore Biotechnology.

Diversification Opportunities for China Metal and SynCore Biotechnology

0.2

Correlation Coefficient

China Metal  SynCore Biotechnology

Modest diversification

The 3 months correlation between China and SynCore is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and SynCore Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SynCore Biotechnology and China Metal 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 China Metal Products are associated (or correlated) with SynCore Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SynCore Biotechnology has no effect on the direction of China Metal i.e., China Metal and SynCore Biotechnology go up and down completely randomly.

Pair Corralation between China Metal and SynCore Biotechnology

Assuming the 90 days trading horizon China Metal Products is expected to under-perform the SynCore Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, China Metal Products is 2.21 times less risky than SynCore Biotechnology. The stock trades about -0.06 of its potential returns per unit of risk. The SynCore Biotechnology Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,460  in SynCore Biotechnology Co on December 30, 2024 and sell it today you would lose (110.00) from holding SynCore Biotechnology Co or give up 3.18% of portfolio value over 90 days.

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

China Metal Products  vs.  SynCore Biotechnology Co

China Metal Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Metal Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, China Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SynCore Biotechnology

Risk-Adjusted Performance

Very Weak

Over the last 90 days SynCore Biotechnology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SynCore Biotechnology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with China Metal and SynCore Biotechnology

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

The idea behind China Metal Products and SynCore Biotechnology Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.