Correlation Between CanSino Biologics and CARSALES

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

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

Diversification Opportunities for CanSino Biologics and CARSALES

0.26

Correlation Coefficient

CanSino Biologics  CARSALES

Modest diversification

The 3 months correlation between CanSino and CARSALES is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of CanSino Biologics i.e., CanSino Biologics and CARSALES go up and down completely randomly.

Pair Corralation between CanSino Biologics and CARSALES

Assuming the 90 days trading horizon CanSino Biologics is expected to generate 3.2 times more return on investment than CARSALES. However, CanSino Biologics is 3.2 times more volatile than CARSALESCOM. It trades about 0.05 of its potential returns per unit of risk. CARSALESCOM is currently generating about -0.04 per unit of risk. If you would invest  368.00  in CanSino Biologics on October 4, 2024 and sell it today you would earn a total of  24.00  from holding CanSino Biologics or generate 6.52% return on investment over 90 days.

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

CanSino Biologics  vs.  CARSALESCOM

CanSino Biologics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CanSino Biologics are ranked lower than 3 (%) 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.

CARSALESCOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CARSALESCOM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, CARSALES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CanSino Biologics and CARSALES

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

The idea behind CanSino Biologics and CARSALESCOM 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.