Correlation Between Dominari Holdings and China Pharma

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

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

Diversification Opportunities for Dominari Holdings and China Pharma

0.57

Correlation Coefficient

Dominari Holdings  China Pharma

Very weak diversification

The 3 months correlation between Dominari and China is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dominari Holdings and China Pharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pharma Holdings and Dominari Holdings 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 Dominari Holdings are associated (or correlated) with China Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pharma Holdings has no effect on the direction of Dominari Holdings i.e., Dominari Holdings and China Pharma go up and down completely randomly.

Pair Corralation between Dominari Holdings and China Pharma

Given the investment horizon of 90 days Dominari Holdings is expected to under-perform the China Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Dominari Holdings is 1.41 times less risky than China Pharma. The stock trades about -0.05 of its potential returns per unit of risk. The China Pharma Holdings is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  57.00  in China Pharma Holdings on October 3, 2024 and sell it today you would lose (34.00) from holding China Pharma Holdings or give up 59.65% of portfolio value over 90 days.

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

Dominari Holdings  vs.  China Pharma Holdings

Dominari Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

China Pharma Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Pharma Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, China Pharma is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dominari Holdings and China Pharma

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

The idea behind Dominari Holdings and China Pharma Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.