Correlation Between China Publishing and Sinocelltech

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

By analyzing existing cross correlation between China Publishing Media and Sinocelltech Group, you can compare the effects of market volatilities on China Publishing and Sinocelltech 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 China Publishing with a short position of Sinocelltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Publishing and Sinocelltech.

Diversification Opportunities for China Publishing and Sinocelltech

0.33

Correlation Coefficient

China Publishing  Sinocelltech

Weak diversification

The 3 months correlation between China and Sinocelltech is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Publishing Media and Sinocelltech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinocelltech Group and China Publishing 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 China Publishing Media are associated (or correlated) with Sinocelltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinocelltech Group has no effect on the direction of China Publishing i.e., China Publishing and Sinocelltech go up and down completely randomly.

Pair Corralation between China Publishing and Sinocelltech

Assuming the 90 days trading horizon China Publishing Media is expected to generate 0.91 times more return on investment than Sinocelltech. However, China Publishing Media is 1.1 times less risky than Sinocelltech. It trades about 0.07 of its potential returns per unit of risk. Sinocelltech Group is currently generating about 0.0 per unit of risk. If you would invest  604.00  in China Publishing Media on September 29, 2024 and sell it today you would earn a total of  148.00  from holding China Publishing Media or generate 24.5% return on investment over 90 days.

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

China Publishing Media  vs.  Sinocelltech Group

China Publishing Media

Risk-Adjusted Performance

3 of 100

Insignificant

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

Sinocelltech Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinocelltech Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with China Publishing and Sinocelltech

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

The idea behind China Publishing Media and Sinocelltech Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..