Correlation Between China Development and OBI Pharma
Can any of the company-specific risk be diversified away by investing in both China Development and OBI Pharma 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 Development and OBI Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Development Financial and OBI Pharma, you can compare the effects of market volatilities on China Development and OBI Pharma 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 Development with a short position of OBI Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Development and OBI Pharma.
Diversification Opportunities for China Development and OBI Pharma
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and OBI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Development Financial and OBI Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBI Pharma and China Development 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 Development Financial are associated (or correlated) with OBI Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBI Pharma has no effect on the direction of China Development i.e., China Development and OBI Pharma go up and down completely randomly.
Pair Corralation between China Development and OBI Pharma
Assuming the 90 days trading horizon China Development Financial is expected to generate 0.82 times more return on investment than OBI Pharma. However, China Development Financial is 1.21 times less risky than OBI Pharma. It trades about 0.13 of its potential returns per unit of risk. OBI Pharma is currently generating about -0.17 per unit of risk. If you would invest 1,670 in China Development Financial on September 2, 2024 and sell it today you would earn a total of 50.00 from holding China Development Financial or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Development Financial vs. OBI Pharma
Performance |
| Timeline |
| China Development |
| OBI Pharma |
China Development and OBI Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Development and OBI Pharma
The main advantage of trading using opposite China Development and OBI Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Development position performs unexpectedly, OBI Pharma 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 OBI Pharma will offset losses from the drop in OBI Pharma's long position.| China Development vs. Cathay Financial Holding | China Development vs. Mega Financial Holding | China Development vs. CTBC Financial Holding | China Development vs. Fubon Financial Holding |
| OBI Pharma vs. Medigen Vaccine Biologics | OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. Adimmune Corp | OBI Pharma vs. PharmaEngine |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |