Correlation Between CARGOJET INC and SINOPHARM GROUP

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

By analyzing existing cross correlation between CARGOJET INC VAR and SINOPHARM GROUP 15ON, you can compare the effects of market volatilities on CARGOJET INC and SINOPHARM GROUP 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 CARGOJET INC with a short position of SINOPHARM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARGOJET INC and SINOPHARM GROUP.

Diversification Opportunities for CARGOJET INC and SINOPHARM GROUP

0.6

Correlation Coefficient

CARGOJET INC  SINOPHARM GROUP

Poor diversification

The 3 months correlation between CARGOJET and SINOPHARM is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CARGOJET INC VAR and SINOPHARM GROUP 15ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINOPHARM GROUP 15ON and CARGOJET INC 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 CARGOJET INC VAR are associated (or correlated) with SINOPHARM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINOPHARM GROUP 15ON has no effect on the direction of CARGOJET INC i.e., CARGOJET INC and SINOPHARM GROUP go up and down completely randomly.

Pair Corralation between CARGOJET INC and SINOPHARM GROUP

Assuming the 90 days trading horizon CARGOJET INC VAR is expected to under-perform the SINOPHARM GROUP. In addition to that, CARGOJET INC is 2.07 times more volatile than SINOPHARM GROUP 15ON. It trades about -0.11 of its total potential returns per unit of risk. SINOPHARM GROUP 15ON is currently generating about -0.19 per unit of volatility. If you would invest  1,330  in SINOPHARM GROUP 15ON on December 23, 2024 and sell it today you would lose (190.00) from holding SINOPHARM GROUP 15ON or give up 14.29% of portfolio value over 90 days.

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

CARGOJET INC VAR  vs.  SINOPHARM GROUP 15ON

CARGOJET INC VAR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CARGOJET INC VAR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SINOPHARM GROUP 15ON

Risk-Adjusted Performance

Very Weak

Over the last 90 days SINOPHARM GROUP 15ON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CARGOJET INC and SINOPHARM GROUP

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

The idea behind CARGOJET INC VAR and SINOPHARM GROUP 15ON 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..