Correlation Between OBI Pharma and Sunmax Biotechnology

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

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

Diversification Opportunities for OBI Pharma and Sunmax Biotechnology

0.41

Correlation Coefficient

OBI Pharma  Sunmax Biotechnology

Very weak diversification

The 3 months correlation between OBI and Sunmax is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Sunmax Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunmax Biotechnology and OBI 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 OBI Pharma 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 OBI Pharma i.e., OBI Pharma and Sunmax Biotechnology go up and down completely randomly.

Pair Corralation between OBI Pharma and Sunmax Biotechnology

Assuming the 90 days trading horizon OBI Pharma is expected to generate 2.96 times less return on investment than Sunmax Biotechnology. But when comparing it to its historical volatility, OBI Pharma is 1.14 times less risky than Sunmax Biotechnology. It trades about 0.11 of its potential returns per unit of risk. Sunmax Biotechnology Co is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  27,700  in Sunmax Biotechnology Co on December 23, 2024 and sell it today you would earn a total of  9,500  from holding Sunmax Biotechnology Co or generate 34.3% return on investment over 90 days.

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

OBI Pharma  vs.  Sunmax Biotechnology Co

OBI Pharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OBI Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, OBI Pharma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 21 (%) 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 OBI Pharma and Sunmax Biotechnology

The main advantage of trading using opposite OBI Pharma and Sunmax Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma 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 OBI Pharma 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.