Correlation Between Sino Biopharmaceutica and Benitec Biopharma

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

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

Diversification Opportunities for Sino Biopharmaceutica and Benitec Biopharma

0.52

Correlation Coefficient

Sino Biopharmaceutica  Benitec Biopharma

Very weak diversification

The 3 months correlation between Sino and Benitec is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Ltd and Benitec Biopharma Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benitec Biopharma and Sino Biopharmaceutica 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 Sino Biopharmaceutical Ltd are associated (or correlated) with Benitec Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benitec Biopharma has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Benitec Biopharma go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Benitec Biopharma

Assuming the 90 days horizon Sino Biopharmaceutica is expected to generate 1.21 times less return on investment than Benitec Biopharma. But when comparing it to its historical volatility, Sino Biopharmaceutical Ltd is 1.82 times less risky than Benitec Biopharma. It trades about 0.08 of its potential returns per unit of risk. Benitec Biopharma Ltd is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,251  in Benitec Biopharma Ltd on December 28, 2024 and sell it today you would earn a total of  122.00  from holding Benitec Biopharma Ltd or generate 9.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Sino Biopharmaceutical Ltd  vs.  Benitec Biopharma Ltd

Sino Biopharmaceutical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Sino Biopharmaceutica showed solid returns over the last few months and may actually be approaching a breakup point.

Benitec Biopharma

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Benitec Biopharma exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino Biopharmaceutica and Benitec Biopharma

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

The idea behind Sino Biopharmaceutical Ltd and Benitec Biopharma Ltd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.