Correlation Between Sino Biopharmaceutica and ChitogenX

Can any of the company-specific risk be diversified away by investing in both Sino Biopharmaceutica and ChitogenX 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 ChitogenX 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 ChitogenX, you can compare the effects of market volatilities on Sino Biopharmaceutica and ChitogenX 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 ChitogenX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Biopharmaceutica and ChitogenX.

Diversification Opportunities for Sino Biopharmaceutica and ChitogenX

-0.86

Correlation Coefficient

Sino Biopharmaceutica  ChitogenX

Pay attention - limited upside

The 3 months correlation between Sino and ChitogenX is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Ltd and ChitogenX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChitogenX 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 ChitogenX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChitogenX has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and ChitogenX go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and ChitogenX

Assuming the 90 days horizon Sino Biopharmaceutical Ltd is expected to generate 0.35 times more return on investment than ChitogenX. However, Sino Biopharmaceutical Ltd is 2.88 times less risky than ChitogenX. It trades about 0.08 of its potential returns per unit of risk. ChitogenX is currently generating about -0.19 per unit of risk. If you would invest  800.00  in Sino Biopharmaceutical Ltd on September 13, 2024 and sell it today you would earn a total of  105.00  from holding Sino Biopharmaceutical Ltd or generate 13.13% return on investment over 90 days.

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

Sino Biopharmaceutical Ltd  vs.  ChitogenX

Sino Biopharmaceutical

Risk-Adjusted Performance

6 of 100

Modest

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.

ChitogenX

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sino Biopharmaceutica and ChitogenX

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

The idea behind Sino Biopharmaceutical Ltd and ChitogenX 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.