Correlation Between Chinese Gamer and Sunmax Biotechnology

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

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

Diversification Opportunities for Chinese Gamer and Sunmax Biotechnology

-0.77

Correlation Coefficient

Chinese Gamer  Sunmax Biotechnology

Pay attention - limited upside

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

Pair Corralation between Chinese Gamer and Sunmax Biotechnology

Assuming the 90 days trading horizon Chinese Gamer International is expected to under-perform the Sunmax Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Chinese Gamer International is 1.8 times less risky than Sunmax Biotechnology. The stock trades about -0.14 of its potential returns per unit of risk. The Sunmax Biotechnology Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  27,500  in Sunmax Biotechnology Co on December 26, 2024 and sell it today you would earn a total of  10,500  from holding Sunmax Biotechnology Co or generate 38.18% return on investment over 90 days.

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

Chinese Gamer International  vs.  Sunmax Biotechnology Co

Chinese Gamer Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chinese Gamer International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Sunmax Biotechnology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sunmax Biotechnology Co are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sunmax Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chinese Gamer and Sunmax Biotechnology

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

The idea behind Chinese Gamer International and Sunmax 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.