Correlation Between Sihuan Pharmaceutical and Eagle Pharmaceuticals

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

By analyzing existing cross correlation between Sihuan Pharmaceutical Holdings and Eagle Pharmaceuticals, you can compare the effects of market volatilities on Sihuan Pharmaceutical and Eagle Pharmaceuticals 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 Sihuan Pharmaceutical with a short position of Eagle Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sihuan Pharmaceutical and Eagle Pharmaceuticals.

Diversification Opportunities for Sihuan Pharmaceutical and Eagle Pharmaceuticals

0.0

Correlation Coefficient

Sihuan Pharmaceutical  Eagle Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Sihuan and Eagle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sihuan Pharmaceutical Holdings and Eagle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pharmaceuticals and Sihuan Pharmaceutical 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 Sihuan Pharmaceutical Holdings are associated (or correlated) with Eagle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pharmaceuticals has no effect on the direction of Sihuan Pharmaceutical i.e., Sihuan Pharmaceutical and Eagle Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sihuan Pharmaceutical and Eagle Pharmaceuticals

If you would invest (100.00) in Eagle Pharmaceuticals on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Eagle Pharmaceuticals or generate -100.0% return on investment over 90 days.

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

Sihuan Pharmaceutical Holdings  vs.  Eagle Pharmaceuticals

Sihuan Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sihuan Pharmaceutical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Sihuan Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Eagle Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Eagle Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sihuan Pharmaceutical and Eagle Pharmaceuticals

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

The idea behind Sihuan Pharmaceutical Holdings and Eagle Pharmaceuticals 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.