Correlation Between China SXT and GelStat Corp

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

Diversification Opportunities for China SXT and GelStat Corp

-0.15

Correlation Coefficient

China SXT  GelStat Corp

Good diversification

The 3 months correlation between China and GelStat is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding China SXT Pharmaceuticals and GelStat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GelStat Corp 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 GelStat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GelStat Corp has no effect on the direction of China SXT i.e., China SXT and GelStat Corp go up and down completely randomly.

Pair Corralation between China SXT and GelStat Corp

Given the investment horizon of 90 days China SXT Pharmaceuticals is expected to under-perform the GelStat Corp. But the stock apears to be less risky and, when comparing its historical volatility, China SXT Pharmaceuticals is 1.89 times less risky than GelStat Corp. The stock trades about 0.0 of its potential returns per unit of risk. The GelStat Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.04  in GelStat Corp on October 11, 2024 and sell it today you would lose (0.01) from holding GelStat Corp or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

China SXT Pharmaceuticals  vs.  GelStat Corp

China SXT Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China SXT Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, China SXT is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

GelStat Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GelStat Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, GelStat Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China SXT and GelStat Corp

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

The idea behind China SXT Pharmaceuticals and GelStat Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.