Correlation Between Sinphar Pharmaceutical and Altek Corp

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

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

Diversification Opportunities for Sinphar Pharmaceutical and Altek Corp

0.71

Correlation Coefficient

Sinphar Pharmaceutical  Altek Corp

Poor diversification

The 3 months correlation between Sinphar and Altek is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sinphar Pharmaceutical Co and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp and Sinphar Pharmaceutical 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 Sinphar Pharmaceutical Co are associated (or correlated) with Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Sinphar Pharmaceutical i.e., Sinphar Pharmaceutical and Altek Corp go up and down completely randomly.

Pair Corralation between Sinphar Pharmaceutical and Altek Corp

Assuming the 90 days trading horizon Sinphar Pharmaceutical is expected to generate 2.82 times less return on investment than Altek Corp. But when comparing it to its historical volatility, Sinphar Pharmaceutical Co is 4.76 times less risky than Altek Corp. It trades about 0.09 of its potential returns per unit of risk. Altek Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,785  in Altek Corp on December 30, 2024 and sell it today you would earn a total of  240.00  from holding Altek Corp or generate 6.34% return on investment over 90 days.

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

Sinphar Pharmaceutical Co  vs.  Altek Corp

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.

Altek Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altek Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Altek Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sinphar Pharmaceutical and Altek Corp

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

The idea behind Sinphar Pharmaceutical Co and Altek Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.