Correlation Between CanSino Biologics and ViacomCBS

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

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

Diversification Opportunities for CanSino Biologics and ViacomCBS

0.67

Correlation Coefficient

CanSino Biologics  ViacomCBS

Poor diversification

The 3 months correlation between CanSino and ViacomCBS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and ViacomCBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViacomCBS and CanSino Biologics 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 CanSino Biologics are associated (or correlated) with ViacomCBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViacomCBS has no effect on the direction of CanSino Biologics i.e., CanSino Biologics and ViacomCBS go up and down completely randomly.

Pair Corralation between CanSino Biologics and ViacomCBS

Assuming the 90 days trading horizon CanSino Biologics is expected to under-perform the ViacomCBS. In addition to that, CanSino Biologics is 2.21 times more volatile than ViacomCBS. It trades about -0.08 of its total potential returns per unit of risk. ViacomCBS is currently generating about -0.07 per unit of volatility. If you would invest  1,023  in ViacomCBS on October 24, 2024 and sell it today you would lose (23.00) from holding ViacomCBS or give up 2.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

CanSino Biologics  vs.  ViacomCBS

CanSino Biologics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CanSino Biologics unveiled solid returns over the last few months and may actually be approaching a breakup point.

ViacomCBS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ViacomCBS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ViacomCBS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CanSino Biologics and ViacomCBS

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

The idea behind CanSino Biologics and ViacomCBS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.