Correlation Between Sino Medical and China CYTS

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

By analyzing existing cross correlation between Sino Medical Sciences and China CYTS Tours, you can compare the effects of market volatilities on Sino Medical and China CYTS 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 Sino Medical with a short position of China CYTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Medical and China CYTS.

Diversification Opportunities for Sino Medical and China CYTS

0.54

Correlation Coefficient

Sino Medical  China CYTS

Very weak diversification

The 3 months correlation between Sino and China is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sino Medical Sciences and China CYTS Tours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China CYTS Tours and Sino Medical 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 Sino Medical Sciences are associated (or correlated) with China CYTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China CYTS Tours has no effect on the direction of Sino Medical i.e., Sino Medical and China CYTS go up and down completely randomly.

Pair Corralation between Sino Medical and China CYTS

Assuming the 90 days trading horizon Sino Medical is expected to generate 1.23 times less return on investment than China CYTS. In addition to that, Sino Medical is 1.83 times more volatile than China CYTS Tours. It trades about 0.04 of its total potential returns per unit of risk. China CYTS Tours is currently generating about 0.1 per unit of volatility. If you would invest  1,037  in China CYTS Tours on December 25, 2024 and sell it today you would earn a total of  78.00  from holding China CYTS Tours or generate 7.52% return on investment over 90 days.

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

Sino Medical Sciences  vs.  China CYTS Tours

Sino Medical Sciences

Risk-Adjusted Performance

Weak

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

China CYTS Tours

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China CYTS Tours are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China CYTS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sino Medical and China CYTS

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

The idea behind Sino Medical Sciences and China CYTS Tours 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.