Correlation Between Shanrong Biotechnology and International Consolidated

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

By analyzing existing cross correlation between Shanrong Biotechnology Corp and International Consolidated Companies, you can compare the effects of market volatilities on Shanrong Biotechnology and International Consolidated 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 Shanrong Biotechnology with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanrong Biotechnology and International Consolidated.

Diversification Opportunities for Shanrong Biotechnology and International Consolidated

-0.07

Correlation Coefficient

Shanrong Biotechnology  International Consolidated

Good diversification

The 3 months correlation between Shanrong and International is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Shanrong Biotechnology Corp and International Consolidated Com in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Shanrong Biotechnology 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 Shanrong Biotechnology Corp are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Shanrong Biotechnology i.e., Shanrong Biotechnology and International Consolidated go up and down completely randomly.

Pair Corralation between Shanrong Biotechnology and International Consolidated

Given the investment horizon of 90 days Shanrong Biotechnology Corp is expected to generate 1.45 times more return on investment than International Consolidated. However, Shanrong Biotechnology is 1.45 times more volatile than International Consolidated Companies. It trades about 0.14 of its potential returns per unit of risk. International Consolidated Companies is currently generating about 0.17 per unit of risk. If you would invest  11.00  in Shanrong Biotechnology Corp on December 23, 2024 and sell it today you would earn a total of  29.00  from holding Shanrong Biotechnology Corp or generate 263.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Shanrong Biotechnology Corp  vs.  International Consolidated Com

Shanrong Biotechnology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shanrong Biotechnology Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental drivers, Shanrong Biotechnology unveiled solid returns over the last few months and may actually be approaching a breakup point.

International Consolidated

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Companies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanrong Biotechnology and International Consolidated

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

The idea behind Shanrong Biotechnology Corp and International Consolidated Companies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.