Correlation Between Innovent Biologics and Therapeutic Solutions

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

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

Diversification Opportunities for Innovent Biologics and Therapeutic Solutions

0.11

Correlation Coefficient

Innovent Biologics  Therapeutic Solutions

Average diversification

The 3 months correlation between Innovent and Therapeutic is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Innovent Biologics and Therapeutic Solutions Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Therapeutic Solutions and Innovent 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 Innovent Biologics are associated (or correlated) with Therapeutic Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Therapeutic Solutions has no effect on the direction of Innovent Biologics i.e., Innovent Biologics and Therapeutic Solutions go up and down completely randomly.

Pair Corralation between Innovent Biologics and Therapeutic Solutions

Assuming the 90 days horizon Innovent Biologics is expected to generate 0.34 times more return on investment than Therapeutic Solutions. However, Innovent Biologics is 2.92 times less risky than Therapeutic Solutions. It trades about -0.03 of its potential returns per unit of risk. Therapeutic Solutions International is currently generating about -0.02 per unit of risk. If you would invest  545.00  in Innovent Biologics on September 12, 2024 and sell it today you would lose (59.00) from holding Innovent Biologics or give up 10.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Innovent Biologics  vs.  Therapeutic Solutions Internat

Innovent Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovent Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Therapeutic Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Therapeutic Solutions International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Innovent Biologics and Therapeutic Solutions

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

The idea behind Innovent Biologics and Therapeutic Solutions International 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.