Correlation Between Sino Biopharmaceutica and IGG

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

By analyzing existing cross correlation between Sino Biopharmaceutical Limited and IGG Inc, you can compare the effects of market volatilities on Sino Biopharmaceutica and IGG 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 IGG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Biopharmaceutica and IGG.

Diversification Opportunities for Sino Biopharmaceutica and IGG

0.85

Correlation Coefficient

Sino Biopharmaceutica  IGG

Very poor diversification

The 3 months correlation between Sino and IGG is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Limited and IGG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGG Inc 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 Limited are associated (or correlated) with IGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGG Inc has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and IGG go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and IGG

Assuming the 90 days horizon Sino Biopharmaceutical Limited is expected to generate 1.07 times more return on investment than IGG. However, Sino Biopharmaceutica is 1.07 times more volatile than IGG Inc. It trades about 0.01 of its potential returns per unit of risk. IGG Inc is currently generating about -0.29 per unit of risk. If you would invest  43.00  in Sino Biopharmaceutical Limited on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Sino Biopharmaceutical Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Sino Biopharmaceutical Limited  vs.  IGG Inc

Sino Biopharmaceutical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Sino Biopharmaceutica reported solid returns over the last few months and may actually be approaching a breakup point.

IGG Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IGG Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, IGG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino Biopharmaceutica and IGG

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

The idea behind Sino Biopharmaceutical Limited and IGG Inc 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.