Correlation Between Brii Biosciences and Sino Biopharmaceutica

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

By analyzing existing cross correlation between Brii Biosciences Limited and Sino Biopharmaceutical Ltd, you can compare the effects of market volatilities on Brii Biosciences and Sino Biopharmaceutica 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 Brii Biosciences with a short position of Sino Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brii Biosciences and Sino Biopharmaceutica.

Diversification Opportunities for Brii Biosciences and Sino Biopharmaceutica

0.32

Correlation Coefficient

Brii Biosciences  Sino Biopharmaceutica

Weak diversification

The 3 months correlation between Brii and Sino is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brii Biosciences Limited and Sino Biopharmaceutical Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical and Brii Biosciences 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 Brii Biosciences Limited are associated (or correlated) with Sino Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Biopharmaceutical has no effect on the direction of Brii Biosciences i.e., Brii Biosciences and Sino Biopharmaceutica go up and down completely randomly.

Pair Corralation between Brii Biosciences and Sino Biopharmaceutica

Assuming the 90 days horizon Brii Biosciences Limited is expected to generate 8.56 times more return on investment than Sino Biopharmaceutica. However, Brii Biosciences is 8.56 times more volatile than Sino Biopharmaceutical Ltd. It trades about 0.13 of its potential returns per unit of risk. Sino Biopharmaceutical Ltd is currently generating about -0.02 per unit of risk. If you would invest  13.00  in Brii Biosciences Limited on December 20, 2024 and sell it today you would earn a total of  17.00  from holding Brii Biosciences Limited or generate 130.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

Brii Biosciences Limited  vs.  Sino Biopharmaceutical Ltd

Brii Biosciences

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brii Biosciences Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental drivers, Brii Biosciences reported solid returns over the last few months and may actually be approaching a breakup point.

Sino Biopharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sino Biopharmaceutical Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Sino Biopharmaceutica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Brii Biosciences and Sino Biopharmaceutica

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

The idea behind Brii Biosciences Limited and Sino Biopharmaceutical Ltd 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.