Correlation Between China SXT and Cosmos Health

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

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

Diversification Opportunities for China SXT and Cosmos Health

-0.05

Correlation Coefficient

China SXT  Cosmos Health

Good diversification

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

Pair Corralation between China SXT and Cosmos Health

Given the investment horizon of 90 days China SXT Pharmaceuticals is expected to generate 3.57 times more return on investment than Cosmos Health. However, China SXT is 3.57 times more volatile than Cosmos Health. It trades about 0.04 of its potential returns per unit of risk. Cosmos Health is currently generating about -0.07 per unit of risk. If you would invest  352.00  in China SXT Pharmaceuticals on December 28, 2024 and sell it today you would lose (79.00) from holding China SXT Pharmaceuticals or give up 22.44% of portfolio value over 90 days.

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

China SXT Pharmaceuticals  vs.  Cosmos Health

China SXT Pharmaceuticals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China SXT Pharmaceuticals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, China SXT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cosmos Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cosmos Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with China SXT and Cosmos Health

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

The idea behind China SXT Pharmaceuticals and Cosmos Health 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.