Correlation Between Sinphar Pharmaceutical and Medigen Biotechnology

Can any of the company-specific risk be diversified away by investing in both Sinphar Pharmaceutical and Medigen 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 Sinphar Pharmaceutical and Medigen Biotechnology 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 Medigen Biotechnology, you can compare the effects of market volatilities on Sinphar Pharmaceutical and Medigen 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 Sinphar Pharmaceutical with a short position of Medigen Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinphar Pharmaceutical and Medigen Biotechnology.

Diversification Opportunities for Sinphar Pharmaceutical and Medigen Biotechnology

0.57

Correlation Coefficient

Sinphar Pharmaceutical  Medigen Biotechnology

Very weak diversification

The 3 months correlation between Sinphar and Medigen is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Sinphar Pharmaceutical Co and Medigen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Biotechnology 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 Medigen Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Biotechnology has no effect on the direction of Sinphar Pharmaceutical i.e., Sinphar Pharmaceutical and Medigen Biotechnology go up and down completely randomly.

Pair Corralation between Sinphar Pharmaceutical and Medigen Biotechnology

Assuming the 90 days trading horizon Sinphar Pharmaceutical Co is expected to under-perform the Medigen Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Sinphar Pharmaceutical Co is 2.83 times less risky than Medigen Biotechnology. The stock trades about -0.1 of its potential returns per unit of risk. The Medigen Biotechnology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,625  in Medigen Biotechnology on September 5, 2024 and sell it today you would lose (150.00) from holding Medigen Biotechnology or give up 4.14% of portfolio value over 90 days.

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

Sinphar Pharmaceutical Co  vs.  Medigen Biotechnology

Sinphar Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinphar Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Medigen Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medigen Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Medigen 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 Sinphar Pharmaceutical and Medigen Biotechnology

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

The idea behind Sinphar Pharmaceutical Co and Medigen Biotechnology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.