Correlation Between PureTech Health and Sino Biopharmaceutica

Can any of the company-specific risk be diversified away by investing in both PureTech Health and Sino Biopharmaceutica 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 PureTech Health and Sino Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PureTech Health plc and Sino Biopharmaceutical Limited, you can compare the effects of market volatilities on PureTech Health and Sino Biopharmaceutica 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 PureTech Health with a short position of Sino Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of PureTech Health and Sino Biopharmaceutica.

Diversification Opportunities for PureTech Health and Sino Biopharmaceutica

0.51

Correlation Coefficient

PureTech Health  Sino Biopharmaceutica

Very weak diversification

The 3 months correlation between PureTech and Sino is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PureTech Health plc and Sino Biopharmaceutical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical and PureTech Health 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 PureTech Health plc are associated (or correlated) with Sino Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Biopharmaceutical has no effect on the direction of PureTech Health i.e., PureTech Health and Sino Biopharmaceutica go up and down completely randomly.

Pair Corralation between PureTech Health and Sino Biopharmaceutica

If you would invest  38.00  in Sino Biopharmaceutical Limited on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Sino Biopharmaceutical Limited or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

PureTech Health plc  vs.  Sino Biopharmaceutical Limited

PureTech Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PureTech Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, PureTech Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Sino Biopharmaceutical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Sino Biopharmaceutica reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PureTech Health and Sino Biopharmaceutica

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

The idea behind PureTech Health plc and Sino Biopharmaceutical 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.