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

-0.14

Correlation Coefficient

Sino Biopharmaceutica  Benitec Biopharma

Good diversification

The 3 months correlation between Sino and Benitec is -0.14. 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 Biopharmaceutical Ltd is expected to under-perform the Benitec Biopharma. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sino Biopharmaceutical Ltd is 1.92 times less risky than Benitec Biopharma. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Benitec Biopharma Ltd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,208  in Benitec Biopharma Ltd on December 3, 2024 and sell it today you would earn a total of  63.00  from holding Benitec Biopharma Ltd or generate 5.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

Sino Biopharmaceutical Ltd  vs.  Benitec Biopharma Ltd

Sino Biopharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sino Biopharmaceutical Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Benitec Biopharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Benitec Biopharma Ltd are ranked lower than 8 (%) 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.