Correlation Between China Bills and PharmaEngine
Can any of the company-specific risk be diversified away by investing in both China Bills and PharmaEngine 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 Bills and PharmaEngine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Bills Finance and PharmaEngine, you can compare the effects of market volatilities on China Bills and PharmaEngine 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 Bills with a short position of PharmaEngine. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Bills and PharmaEngine.
Diversification Opportunities for China Bills and PharmaEngine
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and PharmaEngine is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding China Bills Finance and PharmaEngine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PharmaEngine and China Bills 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 Bills Finance are associated (or correlated) with PharmaEngine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PharmaEngine has no effect on the direction of China Bills i.e., China Bills and PharmaEngine go up and down completely randomly.
Pair Corralation between China Bills and PharmaEngine
Assuming the 90 days trading horizon China Bills Finance is expected to generate 0.25 times more return on investment than PharmaEngine. However, China Bills Finance is 3.96 times less risky than PharmaEngine. It trades about 0.0 of its potential returns per unit of risk. PharmaEngine is currently generating about -0.26 per unit of risk. If you would invest 1,500 in China Bills Finance on September 21, 2024 and sell it today you would earn a total of 0.00 from holding China Bills Finance or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Bills Finance vs. PharmaEngine
Performance |
| Timeline |
| China Bills Finance |
| PharmaEngine |
China Bills and PharmaEngine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Bills and PharmaEngine
The main advantage of trading using opposite China Bills and PharmaEngine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Bills position performs unexpectedly, PharmaEngine 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 PharmaEngine will offset losses from the drop in PharmaEngine's long position.| China Bills vs. Central Reinsurance Corp | China Bills vs. Huaku Development Co | China Bills vs. Fubon Financial Holding | China Bills vs. Chailease Holding Co |
| PharmaEngine vs. Ruentex Development Co | PharmaEngine vs. Symtek Automation Asia | PharmaEngine vs. WiseChip Semiconductor | PharmaEngine vs. Novatek Microelectronics Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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