Correlation Between Sino Medical and Tianjin Realty

Can any of the company-specific risk be diversified away by investing in both Sino Medical and Tianjin Realty 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 Tianjin Realty 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 Tianjin Realty Development, you can compare the effects of market volatilities on Sino Medical and Tianjin Realty 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 Tianjin Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Medical and Tianjin Realty.

Diversification Opportunities for Sino Medical and Tianjin Realty

0.27

Correlation Coefficient

Sino Medical  Tianjin Realty

Modest diversification

The 3 months correlation between Sino and Tianjin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sino Medical Sciences and Tianjin Realty Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Realty Devel 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 Tianjin Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Realty Devel has no effect on the direction of Sino Medical i.e., Sino Medical and Tianjin Realty go up and down completely randomly.

Pair Corralation between Sino Medical and Tianjin Realty

Assuming the 90 days trading horizon Sino Medical Sciences is expected to generate 0.7 times more return on investment than Tianjin Realty. However, Sino Medical Sciences is 1.42 times less risky than Tianjin Realty. It trades about 0.04 of its potential returns per unit of risk. Tianjin Realty Development is currently generating about -0.05 per unit of risk. If you would invest  1,037  in Sino Medical Sciences on December 25, 2024 and sell it today you would earn a total of  49.00  from holding Sino Medical Sciences or generate 4.73% return on investment over 90 days.

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

Sino Medical Sciences  vs.  Tianjin Realty Development

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.

Tianjin Realty Devel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tianjin Realty Development 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 Sino Medical and Tianjin Realty

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

The idea behind Sino Medical Sciences and Tianjin Realty Development 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.