Correlation Between Sinocelltech Group and CytoMed Therapeutics

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

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

Diversification Opportunities for Sinocelltech Group and CytoMed Therapeutics

0.19

Correlation Coefficient

Sinocelltech Group  CytoMed Therapeutics

Average diversification

The 3 months correlation between Sinocelltech and CytoMed is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sinocelltech Group and CytoMed Therapeutics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CytoMed Therapeutics and Sinocelltech Group 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 CytoMed Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CytoMed Therapeutics has no effect on the direction of Sinocelltech Group i.e., Sinocelltech Group and CytoMed Therapeutics go up and down completely randomly.

Pair Corralation between Sinocelltech Group and CytoMed Therapeutics

Assuming the 90 days trading horizon Sinocelltech Group is expected to generate 0.31 times more return on investment than CytoMed Therapeutics. However, Sinocelltech Group is 3.21 times less risky than CytoMed Therapeutics. It trades about 0.04 of its potential returns per unit of risk. CytoMed Therapeutics Limited is currently generating about 0.01 per unit of risk. If you would invest  3,703  in Sinocelltech Group on December 25, 2024 and sell it today you would earn a total of  144.00  from holding Sinocelltech Group or generate 3.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Sinocelltech Group  vs.  CytoMed Therapeutics Limited

Sinocelltech Group

Risk-Adjusted Performance

Insignificant

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

CytoMed Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days CytoMed Therapeutics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CytoMed Therapeutics is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sinocelltech Group and CytoMed Therapeutics

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

The idea behind Sinocelltech Group and CytoMed Therapeutics Limited 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.