Correlation Between Oppein Home and Shandong Sanyuan

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

By analyzing existing cross correlation between Oppein Home Group and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on Oppein Home and Shandong Sanyuan 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 Oppein Home with a short position of Shandong Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppein Home and Shandong Sanyuan.

Diversification Opportunities for Oppein Home and Shandong Sanyuan

0.28

Correlation Coefficient

Oppein Home  Shandong Sanyuan

Modest diversification

The 3 months correlation between Oppein and Shandong is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oppein Home Group and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan Bio and Oppein Home 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 Oppein Home Group are associated (or correlated) with Shandong Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of Oppein Home i.e., Oppein Home and Shandong Sanyuan go up and down completely randomly.

Pair Corralation between Oppein Home and Shandong Sanyuan

Assuming the 90 days trading horizon Oppein Home Group is expected to under-perform the Shandong Sanyuan. In addition to that, Oppein Home is 1.3 times more volatile than Shandong Sanyuan Biotechnology. It trades about -0.03 of its total potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about -0.02 per unit of volatility. If you would invest  3,466  in Shandong Sanyuan Biotechnology on October 10, 2024 and sell it today you would lose (960.00) from holding Shandong Sanyuan Biotechnology or give up 27.7% of portfolio value over 90 days.

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

Oppein Home Group  vs.  Shandong Sanyuan Biotechnology

Oppein Home Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oppein Home Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oppein Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Shandong Sanyuan Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Sanyuan Biotechnology 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 Oppein Home and Shandong Sanyuan

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

The idea behind Oppein Home Group and Shandong Sanyuan Biotechnology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.