Correlation Between Shanghai Pharmaceuticals and MEDIPAL HOLDINGS

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

By analyzing existing cross correlation between Shanghai Pharmaceuticals Holding and MEDIPAL HOLDINGS P, you can compare the effects of market volatilities on Shanghai Pharmaceuticals and MEDIPAL HOLDINGS 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 Shanghai Pharmaceuticals with a short position of MEDIPAL HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pharmaceuticals and MEDIPAL HOLDINGS.

Diversification Opportunities for Shanghai Pharmaceuticals and MEDIPAL HOLDINGS

0.37

Correlation Coefficient

Shanghai Pharmaceuticals  MEDIPAL HOLDINGS

Weak diversification

The 3 months correlation between Shanghai and MEDIPAL is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pharmaceuticals Holdi and MEDIPAL HOLDINGS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPAL HOLDINGS P and Shanghai 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 Shanghai Pharmaceuticals Holding are associated (or correlated) with MEDIPAL HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPAL HOLDINGS P has no effect on the direction of Shanghai Pharmaceuticals i.e., Shanghai Pharmaceuticals and MEDIPAL HOLDINGS go up and down completely randomly.

Pair Corralation between Shanghai Pharmaceuticals and MEDIPAL HOLDINGS

Assuming the 90 days horizon Shanghai Pharmaceuticals Holding is expected to under-perform the MEDIPAL HOLDINGS. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Pharmaceuticals Holding is 1.0 times less risky than MEDIPAL HOLDINGS. The stock trades about -0.21 of its potential returns per unit of risk. The MEDIPAL HOLDINGS P is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,440  in MEDIPAL HOLDINGS P on December 27, 2024 and sell it today you would earn a total of  0.00  from holding MEDIPAL HOLDINGS P or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Shanghai Pharmaceuticals Holdi  vs.  MEDIPAL HOLDINGS P

Shanghai Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shanghai Pharmaceuticals Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MEDIPAL HOLDINGS P

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Shanghai Pharmaceuticals and MEDIPAL HOLDINGS

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

The idea behind Shanghai Pharmaceuticals Holding and MEDIPAL HOLDINGS P 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.