Correlation Between Sino Biopharmaceutica and Kane Biotech

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

Diversification Opportunities for Sino Biopharmaceutica and Kane Biotech

0.05

Correlation Coefficient

Sino Biopharmaceutica  Kane Biotech

Significant diversification

The 3 months correlation between Sino and Kane is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Ltd and Kane Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kane Biotech 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 Kane Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kane Biotech has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Kane Biotech go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Kane Biotech

Assuming the 90 days horizon Sino Biopharmaceutical Ltd is expected to generate 0.73 times more return on investment than Kane Biotech. However, Sino Biopharmaceutical Ltd is 1.36 times less risky than Kane Biotech. It trades about 0.22 of its potential returns per unit of risk. Kane Biotech is currently generating about -0.22 per unit of risk. If you would invest  725.00  in Sino Biopharmaceutical Ltd on December 4, 2024 and sell it today you would earn a total of  81.00  from holding Sino Biopharmaceutical Ltd or generate 11.17% return on investment over 90 days.

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

Sino Biopharmaceutical Ltd  vs.  Kane Biotech

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.

Kane Biotech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kane Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward 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.

Pair Trading with Sino Biopharmaceutica and Kane Biotech

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

The idea behind Sino Biopharmaceutical Ltd and Kane Biotech 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.