Correlation Between Apex Biotechnology and Sinphar Pharmaceutical

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

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

Diversification Opportunities for Apex Biotechnology and Sinphar Pharmaceutical

0.77

Correlation Coefficient

Apex Biotechnology  Sinphar Pharmaceutical

Poor diversification

The 3 months correlation between Apex and Sinphar is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Apex Biotechnology Corp and Sinphar Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinphar Pharmaceutical and Apex Biotechnology 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 Apex Biotechnology Corp are associated (or correlated) with Sinphar Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinphar Pharmaceutical has no effect on the direction of Apex Biotechnology i.e., Apex Biotechnology and Sinphar Pharmaceutical go up and down completely randomly.

Pair Corralation between Apex Biotechnology and Sinphar Pharmaceutical

Assuming the 90 days trading horizon Apex Biotechnology Corp is expected to generate 1.68 times more return on investment than Sinphar Pharmaceutical. However, Apex Biotechnology is 1.68 times more volatile than Sinphar Pharmaceutical Co. It trades about 0.21 of its potential returns per unit of risk. Sinphar Pharmaceutical Co is currently generating about 0.09 per unit of risk. If you would invest  2,980  in Apex Biotechnology Corp on December 30, 2024 and sell it today you would earn a total of  375.00  from holding Apex Biotechnology Corp or generate 12.58% return on investment over 90 days.

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

Apex Biotechnology Corp  vs.  Sinphar Pharmaceutical Co

Apex Biotechnology Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apex Biotechnology Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Apex Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Sinphar Pharmaceutical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sinphar Pharmaceutical Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Sinphar Pharmaceutical 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 Apex Biotechnology and Sinphar Pharmaceutical

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

The idea behind Apex Biotechnology Corp and Sinphar Pharmaceutical 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.