Correlation Between BEXIMCO PHARMAGDR and SIMCERE PHARMAC

Can any of the company-specific risk be diversified away by investing in both BEXIMCO PHARMAGDR and SIMCERE PHARMAC 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 BEXIMCO PHARMAGDR and SIMCERE PHARMAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BEXIMCO PHARMAGDR REGS and SIMCERE PHARMAC GRP, you can compare the effects of market volatilities on BEXIMCO PHARMAGDR and SIMCERE PHARMAC 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 BEXIMCO PHARMAGDR with a short position of SIMCERE PHARMAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of BEXIMCO PHARMAGDR and SIMCERE PHARMAC.

Diversification Opportunities for BEXIMCO PHARMAGDR and SIMCERE PHARMAC

0.67

Correlation Coefficient

BEXIMCO PHARMAGDR  SIMCERE PHARMAC

Poor diversification

The 3 months correlation between BEXIMCO and SIMCERE is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BEXIMCO PHARMAGDR REGS and SIMCERE PHARMAC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMCERE PHARMAC GRP and BEXIMCO PHARMAGDR 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 BEXIMCO PHARMAGDR REGS are associated (or correlated) with SIMCERE PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMCERE PHARMAC GRP has no effect on the direction of BEXIMCO PHARMAGDR i.e., BEXIMCO PHARMAGDR and SIMCERE PHARMAC go up and down completely randomly.

Pair Corralation between BEXIMCO PHARMAGDR and SIMCERE PHARMAC

Assuming the 90 days trading horizon BEXIMCO PHARMAGDR REGS is expected to generate 1.52 times more return on investment than SIMCERE PHARMAC. However, BEXIMCO PHARMAGDR is 1.52 times more volatile than SIMCERE PHARMAC GRP. It trades about 0.02 of its potential returns per unit of risk. SIMCERE PHARMAC GRP is currently generating about 0.02 per unit of risk. If you would invest  45.00  in BEXIMCO PHARMAGDR REGS on September 26, 2024 and sell it today you would lose (4.00) from holding BEXIMCO PHARMAGDR REGS or give up 8.89% of portfolio value over 90 days.

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

BEXIMCO PHARMAGDR REGS  vs.  SIMCERE PHARMAC GRP

BEXIMCO PHARMAGDR REGS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BEXIMCO PHARMAGDR REGS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BEXIMCO PHARMAGDR reported solid returns over the last few months and may actually be approaching a breakup point.

SIMCERE PHARMAC GRP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIMCERE PHARMAC GRP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIMCERE PHARMAC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BEXIMCO PHARMAGDR and SIMCERE PHARMAC

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

The idea behind BEXIMCO PHARMAGDR REGS and SIMCERE PHARMAC GRP 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.