Correlation Between CanSino Biologics and Food Life

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

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

Diversification Opportunities for CanSino Biologics and Food Life

0.73

Correlation Coefficient

CanSino Biologics  Food Life

Poor diversification

The 3 months correlation between CanSino and Food is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and Food Life Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Life Companies 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 Food Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Life Companies has no effect on the direction of CanSino Biologics i.e., CanSino Biologics and Food Life go up and down completely randomly.

Pair Corralation between CanSino Biologics and Food Life

Assuming the 90 days trading horizon CanSino Biologics is expected to generate 2.26 times more return on investment than Food Life. However, CanSino Biologics is 2.26 times more volatile than Food Life Companies. It trades about 0.09 of its potential returns per unit of risk. Food Life Companies is currently generating about 0.03 per unit of risk. If you would invest  292.00  in CanSino Biologics on October 20, 2024 and sell it today you would earn a total of  56.00  from holding CanSino Biologics or generate 19.18% return on investment over 90 days.

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

CanSino Biologics  vs.  Food Life Companies

CanSino Biologics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CanSino Biologics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Food Life Companies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Food Life Companies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Food Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CanSino Biologics and Food Life

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

The idea behind CanSino Biologics and Food Life Companies 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.