Correlation Between Martin Marietta and SINOPHARM GROUP

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

By analyzing existing cross correlation between Martin Marietta Materials and SINOPHARM GROUP 15ON, you can compare the effects of market volatilities on Martin Marietta and SINOPHARM GROUP 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 Martin Marietta with a short position of SINOPHARM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and SINOPHARM GROUP.

Diversification Opportunities for Martin Marietta and SINOPHARM GROUP

-0.3

Correlation Coefficient

Martin Marietta  SINOPHARM GROUP

Very good diversification

The 3 months correlation between Martin and SINOPHARM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and SINOPHARM GROUP 15ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINOPHARM GROUP 15ON and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with SINOPHARM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINOPHARM GROUP 15ON has no effect on the direction of Martin Marietta i.e., Martin Marietta and SINOPHARM GROUP go up and down completely randomly.

Pair Corralation between Martin Marietta and SINOPHARM GROUP

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.13 times more return on investment than SINOPHARM GROUP. However, Martin Marietta is 1.13 times more volatile than SINOPHARM GROUP 15ON. It trades about 0.14 of its potential returns per unit of risk. SINOPHARM GROUP 15ON is currently generating about -0.39 per unit of risk. If you would invest  51,040  in Martin Marietta Materials on October 26, 2024 and sell it today you would earn a total of  1,580  from holding Martin Marietta Materials or generate 3.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Martin Marietta Materials  vs.  SINOPHARM GROUP 15ON

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SINOPHARM GROUP 15ON

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SINOPHARM GROUP 15ON are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SINOPHARM GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Martin Marietta and SINOPHARM GROUP

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

The idea behind Martin Marietta Materials and SINOPHARM GROUP 15ON 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.