Correlation Between China Television and Orient Pharma

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

By analyzing existing cross correlation between China Television Co and Orient Pharma Co, you can compare the effects of market volatilities on China Television and Orient Pharma 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 China Television with a short position of Orient Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Television and Orient Pharma.

Diversification Opportunities for China Television and Orient Pharma

-0.66

Correlation Coefficient

China Television  Orient Pharma

Excellent diversification

The 3 months correlation between China and Orient is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Television Co and Orient Pharma Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Pharma and China Television 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 China Television Co are associated (or correlated) with Orient Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Pharma has no effect on the direction of China Television i.e., China Television and Orient Pharma go up and down completely randomly.

Pair Corralation between China Television and Orient Pharma

Assuming the 90 days trading horizon China Television Co is expected to under-perform the Orient Pharma. In addition to that, China Television is 1.18 times more volatile than Orient Pharma Co. It trades about 0.0 of its total potential returns per unit of risk. Orient Pharma Co is currently generating about 0.06 per unit of volatility. If you would invest  2,045  in Orient Pharma Co on October 4, 2024 and sell it today you would earn a total of  1,545  from holding Orient Pharma Co or generate 75.55% return on investment over 90 days.

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

China Television Co  vs.  Orient Pharma Co

China Television

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Television Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Orient Pharma

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orient Pharma Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orient Pharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Television and Orient Pharma

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

The idea behind China Television Co and Orient Pharma Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.