Correlation Between Orient Pharma and Li Kang

Can any of the company-specific risk be diversified away by investing in both Orient Pharma and Li Kang 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 Orient Pharma and Li Kang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orient Pharma Co and Li Kang Biomedical, you can compare the effects of market volatilities on Orient Pharma and Li Kang 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 Orient Pharma with a short position of Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orient Pharma and Li Kang.

Diversification Opportunities for Orient Pharma and Li Kang

0.0

Correlation Coefficient

Orient Pharma  Li Kang

Pay attention - limited upside

The 3 months correlation between Orient and 6242 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Orient Pharma Co and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical and Orient Pharma 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 Orient Pharma Co are associated (or correlated) with Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of Orient Pharma i.e., Orient Pharma and Li Kang go up and down completely randomly.

Pair Corralation between Orient Pharma and Li Kang

If you would invest  0.00  in Orient Pharma Co on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Orient Pharma Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Orient Pharma Co  vs.  Li Kang Biomedical

Orient Pharma

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Orient Pharma Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Orient Pharma is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Li Kang Biomedical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Li Kang Biomedical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Li Kang is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Orient Pharma and Li Kang

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

The idea behind Orient Pharma Co and Li Kang Biomedical 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.