Correlation Between Patterson Companies and SINOPHARM GROUP

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

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

Diversification Opportunities for Patterson Companies and SINOPHARM GROUP

0.48

Correlation Coefficient

Patterson Companies  SINOPHARM GROUP

Very weak diversification

The 3 months correlation between Patterson and SINOPHARM is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Patterson Companies 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 Patterson Companies 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 Patterson Companies 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 Patterson Companies i.e., Patterson Companies and SINOPHARM GROUP go up and down completely randomly.

Pair Corralation between Patterson Companies and SINOPHARM GROUP

Assuming the 90 days horizon Patterson Companies is expected to generate 2.62 times more return on investment than SINOPHARM GROUP. However, Patterson Companies is 2.62 times more volatile than SINOPHARM GROUP 15ON. It trades about 0.19 of its potential returns per unit of risk. SINOPHARM GROUP 15ON is currently generating about 0.1 per unit of risk. If you would invest  1,950  in Patterson Companies on September 23, 2024 and sell it today you would earn a total of  990.00  from holding Patterson Companies or generate 50.77% return on investment over 90 days.

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

Patterson Companies  vs.  SINOPHARM GROUP 15ON

Patterson Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Patterson Companies reported solid returns over the last few months and may actually be approaching a breakup point.

SINOPHARM GROUP 15ON

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SINOPHARM GROUP 15ON are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SINOPHARM GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Patterson Companies and SINOPHARM GROUP

The main advantage of trading using opposite Patterson Companies and SINOPHARM GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Patterson Companies 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 Patterson Companies 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.