Correlation Between Ok Biotech and Sinopower Semiconductor

Can any of the company-specific risk be diversified away by investing in both Ok Biotech and Sinopower Semiconductor 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 Ok Biotech and Sinopower Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Ok Biotech and Sinopower Semiconductor

0.53

Correlation Coefficient

Ok Biotech  Sinopower Semiconductor

Very weak diversification

The 3 months correlation between 4155 and Sinopower is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ok Biotech Co and Sinopower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopower Semiconductor and Ok Biotech 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 Ok Biotech Co are associated (or correlated) with Sinopower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopower Semiconductor has no effect on the direction of Ok Biotech i.e., Ok Biotech and Sinopower Semiconductor go up and down completely randomly.

Pair Corralation between Ok Biotech and Sinopower Semiconductor

Assuming the 90 days trading horizon Ok Biotech Co is expected to under-perform the Sinopower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Ok Biotech Co is 1.86 times less risky than Sinopower Semiconductor. The stock trades about -0.11 of its potential returns per unit of risk. The Sinopower Semiconductor is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,540  in Sinopower Semiconductor on December 30, 2024 and sell it today you would earn a total of  1,410  from holding Sinopower Semiconductor or generate 14.78% return on investment over 90 days.

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

Ok Biotech Co  vs.  Sinopower Semiconductor

Ok Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ok Biotech Co 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.

Sinopower Semiconductor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopower Semiconductor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sinopower Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ok Biotech and Sinopower Semiconductor

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

The idea behind Ok Biotech Co and Sinopower Semiconductor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.