Correlation Between SINOPHARM GROUP and MEDIPAL HOLDINGS

Can any of the company-specific risk be diversified away by investing in both SINOPHARM GROUP and MEDIPAL HOLDINGS 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 MEDIPAL HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SINOPHARM GROUP 15ON and MEDIPAL HOLDINGS P, you can compare the effects of market volatilities on SINOPHARM GROUP and MEDIPAL HOLDINGS 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 MEDIPAL HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SINOPHARM GROUP and MEDIPAL HOLDINGS.

Diversification Opportunities for SINOPHARM GROUP and MEDIPAL HOLDINGS

-0.22

Correlation Coefficient

SINOPHARM GROUP  MEDIPAL HOLDINGS

Very good diversification

The 3 months correlation between SINOPHARM and MEDIPAL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SINOPHARM GROUP 15ON and MEDIPAL HOLDINGS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPAL HOLDINGS P 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 15ON are associated (or correlated) with MEDIPAL HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPAL HOLDINGS P has no effect on the direction of SINOPHARM GROUP i.e., SINOPHARM GROUP and MEDIPAL HOLDINGS go up and down completely randomly.

Pair Corralation between SINOPHARM GROUP and MEDIPAL HOLDINGS

Assuming the 90 days trading horizon SINOPHARM GROUP 15ON is expected to generate 2.02 times more return on investment than MEDIPAL HOLDINGS. However, SINOPHARM GROUP is 2.02 times more volatile than MEDIPAL HOLDINGS P. It trades about 0.18 of its potential returns per unit of risk. MEDIPAL HOLDINGS P is currently generating about -0.08 per unit of risk. If you would invest  970.00  in SINOPHARM GROUP 15ON on September 23, 2024 and sell it today you would earn a total of  340.00  from holding SINOPHARM GROUP 15ON or generate 35.05% return on investment over 90 days.

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

SINOPHARM GROUP 15ON  vs.  MEDIPAL HOLDINGS P

SINOPHARM GROUP 15ON

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SINOPHARM GROUP 15ON are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SINOPHARM GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

MEDIPAL HOLDINGS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDIPAL HOLDINGS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SINOPHARM GROUP and MEDIPAL HOLDINGS

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

The idea behind SINOPHARM GROUP 15ON and MEDIPAL HOLDINGS P 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.