Correlation Between OrganiGram Holdings and China SXT

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

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

Diversification Opportunities for OrganiGram Holdings and China SXT

0.83

Correlation Coefficient

OrganiGram Holdings  China SXT

Very poor diversification

The 3 months correlation between OrganiGram and China is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding OrganiGram Holdings and China SXT Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China SXT Pharmaceuticals and OrganiGram 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 OrganiGram Holdings are associated (or correlated) with China SXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China SXT Pharmaceuticals has no effect on the direction of OrganiGram Holdings i.e., OrganiGram Holdings and China SXT go up and down completely randomly.

Pair Corralation between OrganiGram Holdings and China SXT

Considering the 90-day investment horizon OrganiGram Holdings is expected to generate 2.01 times less return on investment than China SXT. But when comparing it to its historical volatility, OrganiGram Holdings is 2.34 times less risky than China SXT. It trades about 0.09 of its potential returns per unit of risk. China SXT Pharmaceuticals is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  39.00  in China SXT Pharmaceuticals on October 1, 2024 and sell it today you would earn a total of  2.80  from holding China SXT Pharmaceuticals or generate 7.18% return on investment over 90 days.

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

OrganiGram Holdings  vs.  China SXT Pharmaceuticals

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

China SXT Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China SXT Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with OrganiGram Holdings and China SXT

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

The idea behind OrganiGram Holdings and China SXT Pharmaceuticals 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.