Correlation Between Rigel Pharmaceuticals and Sino Biopharmaceutica

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

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

Diversification Opportunities for Rigel Pharmaceuticals and Sino Biopharmaceutica

-0.27

Correlation Coefficient

Rigel Pharmaceuticals  Sino Biopharmaceutica

Very good diversification

The 3 months correlation between Rigel and Sino is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rigel Pharmaceuticals and Sino Biopharmaceutical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical and Rigel Pharmaceuticals 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 Rigel Pharmaceuticals 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 Rigel Pharmaceuticals i.e., Rigel Pharmaceuticals and Sino Biopharmaceutica go up and down completely randomly.

Pair Corralation between Rigel Pharmaceuticals and Sino Biopharmaceutica

Given the investment horizon of 90 days Rigel Pharmaceuticals is expected to generate 1.91 times more return on investment than Sino Biopharmaceutica. However, Rigel Pharmaceuticals is 1.91 times more volatile than Sino Biopharmaceutical Limited. It trades about 0.06 of its potential returns per unit of risk. Sino Biopharmaceutical Limited is currently generating about 0.08 per unit of risk. If you would invest  1,647  in Rigel Pharmaceuticals on December 28, 2024 and sell it today you would earn a total of  192.00  from holding Rigel Pharmaceuticals or generate 11.66% return on investment over 90 days.

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

Rigel Pharmaceuticals  vs.  Sino Biopharmaceutical Limited

Rigel Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rigel Pharmaceuticals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Rigel Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sino Biopharmaceutical

Risk-Adjusted Performance

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Rigel Pharmaceuticals and Sino Biopharmaceutica

The main advantage of trading using opposite Rigel Pharmaceuticals and Sino Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rigel Pharmaceuticals 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 Rigel Pharmaceuticals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.