Correlation Between Sinocelltech and Cultural Investment

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

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

Diversification Opportunities for Sinocelltech and Cultural Investment

0.23

Correlation Coefficient

Sinocelltech  Cultural Investment

Modest diversification

The 3 months correlation between Sinocelltech and Cultural is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sinocelltech Group and Cultural Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cultural Investment and Sinocelltech 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 Sinocelltech Group are associated (or correlated) with Cultural Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cultural Investment has no effect on the direction of Sinocelltech i.e., Sinocelltech and Cultural Investment go up and down completely randomly.

Pair Corralation between Sinocelltech and Cultural Investment

Assuming the 90 days trading horizon Sinocelltech Group is expected to under-perform the Cultural Investment. But the stock apears to be less risky and, when comparing its historical volatility, Sinocelltech Group is 1.39 times less risky than Cultural Investment. The stock trades about -0.01 of its potential returns per unit of risk. The Cultural Investment Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Cultural Investment Holdings on December 2, 2024 and sell it today you would lose (9.00) from holding Cultural Investment Holdings or give up 4.19% of portfolio value over 90 days.

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

Sinocelltech Group  vs.  Cultural Investment Holdings

Sinocelltech Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinocelltech Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sinocelltech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cultural Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cultural Investment Holdings 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 Sinocelltech and Cultural Investment

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

The idea behind Sinocelltech Group and Cultural Investment Holdings 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.