Correlation Between Beijing Enlight and Sino Medical

Can any of the company-specific risk be diversified away by investing in both Beijing Enlight and Sino Medical 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 Beijing Enlight and Sino Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beijing Enlight Media and Sino Medical Sciences, you can compare the effects of market volatilities on Beijing Enlight and Sino Medical 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 Beijing Enlight with a short position of Sino Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Enlight and Sino Medical.

Diversification Opportunities for Beijing Enlight and Sino Medical

0.71

Correlation Coefficient

Beijing Enlight  Sino Medical

Poor diversification

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

Pair Corralation between Beijing Enlight and Sino Medical

Assuming the 90 days trading horizon Beijing Enlight Media is expected to generate 3.05 times more return on investment than Sino Medical. However, Beijing Enlight is 3.05 times more volatile than Sino Medical Sciences. It trades about 0.24 of its potential returns per unit of risk. Sino Medical Sciences is currently generating about 0.04 per unit of risk. If you would invest  937.00  in Beijing Enlight Media on December 25, 2024 and sell it today you would earn a total of  1,268  from holding Beijing Enlight Media or generate 135.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Beijing Enlight Media  vs.  Sino Medical Sciences

Beijing Enlight Media

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Enlight Media are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Enlight sustained solid returns over the last few months and may actually be approaching a breakup point.

Sino Medical Sciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Medical Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sino Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Beijing Enlight and Sino Medical

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

The idea behind Beijing Enlight Media and Sino Medical Sciences 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.