Correlation Between China SXT and Slang Worldwide

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

Diversification Opportunities for China SXT and Slang Worldwide

0.61

Correlation Coefficient

China SXT  Slang Worldwide

Poor diversification

The 3 months correlation between China and Slang is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China SXT Pharmaceuticals and Slang Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slang Worldwide 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 Slang Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slang Worldwide has no effect on the direction of China SXT i.e., China SXT and Slang Worldwide go up and down completely randomly.

Pair Corralation between China SXT and Slang Worldwide

If you would invest  43.00  in China SXT Pharmaceuticals on October 11, 2024 and sell it today you would earn a total of  6.00  from holding China SXT Pharmaceuticals or generate 13.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

China SXT Pharmaceuticals  vs.  Slang Worldwide

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Slang Worldwide

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Slang Worldwide are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Slang Worldwide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China SXT and Slang Worldwide

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

The idea behind China SXT Pharmaceuticals and Slang Worldwide 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.