Correlation Between Sino Biopharmaceutica and Oxford Nanopore

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

Diversification Opportunities for Sino Biopharmaceutica and Oxford Nanopore

-0.49

Correlation Coefficient

Sino Biopharmaceutica  Oxford Nanopore

Very good diversification

The 3 months correlation between Sino and Oxford is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Ltd and Oxford Nanopore Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Nanopore Tech 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 Oxford Nanopore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Nanopore Tech has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Oxford Nanopore go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Oxford Nanopore

Assuming the 90 days horizon Sino Biopharmaceutical Ltd is expected to generate 0.5 times more return on investment than Oxford Nanopore. However, Sino Biopharmaceutical Ltd is 1.99 times less risky than Oxford Nanopore. It trades about 0.08 of its potential returns per unit of risk. Oxford Nanopore Technologies is currently generating about -0.03 per unit of risk. If you would invest  834.00  in Sino Biopharmaceutical Ltd on December 28, 2024 and sell it today you would earn a total of  104.00  from holding Sino Biopharmaceutical Ltd or generate 12.47% return on investment over 90 days.

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

Sino Biopharmaceutical Ltd  vs.  Oxford Nanopore Technologies

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.

Oxford Nanopore Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oxford Nanopore Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sino Biopharmaceutica and Oxford Nanopore

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

The idea behind Sino Biopharmaceutical Ltd and Oxford Nanopore Technologies 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.