Correlation Between Integrated Biopharma and China Feihe

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

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

Diversification Opportunities for Integrated Biopharma and China Feihe

-0.41

Correlation Coefficient

Integrated Biopharma  China Feihe

Very good diversification

The 3 months correlation between Integrated and China is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Biopharma and China Feihe Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Feihe Limited and Integrated Biopharma 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 Integrated Biopharma are associated (or correlated) with China Feihe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Feihe Limited has no effect on the direction of Integrated Biopharma i.e., Integrated Biopharma and China Feihe go up and down completely randomly.

Pair Corralation between Integrated Biopharma and China Feihe

Given the investment horizon of 90 days Integrated Biopharma is expected to generate 29.77 times less return on investment than China Feihe. In addition to that, Integrated Biopharma is 1.02 times more volatile than China Feihe Limited. It trades about 0.0 of its total potential returns per unit of risk. China Feihe Limited is currently generating about 0.07 per unit of volatility. If you would invest  18.00  in China Feihe Limited on September 6, 2024 and sell it today you would earn a total of  52.00  from holding China Feihe Limited or generate 288.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.16%
Values	Daily Returns

Integrated Biopharma  vs.  China Feihe Limited

Integrated Biopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Biopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Integrated Biopharma is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

China Feihe Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Feihe Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, China Feihe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Integrated Biopharma and China Feihe

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

The idea behind Integrated Biopharma and China Feihe Limited 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.