Correlation Between Sinopharm Group and Electronic Arts

Can any of the company-specific risk be diversified away by investing in both Sinopharm Group and Electronic Arts 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 Sinopharm Group and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinopharm Group Co and Electronic Arts, you can compare the effects of market volatilities on Sinopharm Group and Electronic Arts 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 Sinopharm Group with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinopharm Group and Electronic Arts.

Diversification Opportunities for Sinopharm Group and Electronic Arts

0.24

Correlation Coefficient

Sinopharm Group  Electronic Arts

Modest diversification

The 3 months correlation between Sinopharm and Electronic is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sinopharm Group Co and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Sinopharm Group 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 Sinopharm Group Co are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Sinopharm Group i.e., Sinopharm Group and Electronic Arts go up and down completely randomly.

Pair Corralation between Sinopharm Group and Electronic Arts

Assuming the 90 days horizon Sinopharm Group is expected to generate 1.79 times less return on investment than Electronic Arts. In addition to that, Sinopharm Group is 1.63 times more volatile than Electronic Arts. It trades about 0.03 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.1 per unit of volatility. If you would invest  13,074  in Electronic Arts on October 11, 2024 and sell it today you would earn a total of  914.00  from holding Electronic Arts or generate 6.99% return on investment over 90 days.

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

Sinopharm Group Co  vs.  Electronic Arts

Sinopharm Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sinopharm Group Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sinopharm Group is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Electronic Arts

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Electronic Arts may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sinopharm Group and Electronic Arts

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

The idea behind Sinopharm Group Co and Electronic Arts 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.