Correlation Between Sino Medical and Eyebright Medical

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

Diversification Opportunities for Sino Medical and Eyebright Medical

-0.06

Correlation Coefficient

Sino Medical  Eyebright Medical

Good diversification

The 3 months correlation between Sino and Eyebright is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sino Medical Sciences and Eyebright Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyebright Medical 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 Eyebright Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyebright Medical has no effect on the direction of Sino Medical i.e., Sino Medical and Eyebright Medical go up and down completely randomly.

Pair Corralation between Sino Medical and Eyebright Medical

Assuming the 90 days trading horizon Sino Medical Sciences is expected to generate 1.14 times more return on investment than Eyebright Medical. However, Sino Medical is 1.14 times more volatile than Eyebright Medical Technology. It trades about 0.04 of its potential returns per unit of risk. Eyebright Medical Technology is currently generating about 0.04 per unit of risk. If you would invest  1,045  in Sino Medical Sciences on December 26, 2024 and sell it today you would earn a total of  41.00  from holding Sino Medical Sciences or generate 3.92% return on investment over 90 days.

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

Sino Medical Sciences  vs.  Eyebright Medical Technology

Sino Medical Sciences

Risk-Adjusted Performance

Insignificant

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 strong basic indicators, Sino Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eyebright Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eyebright Medical Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eyebright Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sino Medical and Eyebright Medical

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

The idea behind Sino Medical Sciences and Eyebright Medical Technology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.