Correlation Between OBI Pharma and Sunmax Biotechnology
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Sunmax Biotechnology 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 OBI Pharma and Sunmax Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Sunmax Biotechnology Co, you can compare the effects of market volatilities on OBI Pharma and Sunmax Biotechnology 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 OBI Pharma with a short position of Sunmax Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Sunmax Biotechnology.
Diversification Opportunities for OBI Pharma and Sunmax Biotechnology
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OBI and Sunmax is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Sunmax Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunmax Biotechnology and OBI Pharma 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 OBI Pharma are associated (or correlated) with Sunmax Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunmax Biotechnology has no effect on the direction of OBI Pharma i.e., OBI Pharma and Sunmax Biotechnology go up and down completely randomly.
Pair Corralation between OBI Pharma and Sunmax Biotechnology
Assuming the 90 days trading horizon OBI Pharma is expected to generate 1.13 times more return on investment than Sunmax Biotechnology. However, OBI Pharma is 1.13 times more volatile than Sunmax Biotechnology Co. It trades about 0.04 of its potential returns per unit of risk. Sunmax Biotechnology Co is currently generating about 0.0 per unit of risk. If you would invest 5,880 in OBI Pharma on August 27, 2024 and sell it today you would earn a total of 450.00 from holding OBI Pharma or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Sunmax Biotechnology Co
Performance |
| Timeline |
| OBI Pharma |
| Sunmax Biotechnology |
OBI Pharma and Sunmax Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Sunmax Biotechnology
The main advantage of trading using opposite OBI Pharma and Sunmax Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Sunmax Biotechnology 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 Sunmax Biotechnology will offset losses from the drop in Sunmax Biotechnology's long position.The idea behind OBI Pharma and Sunmax Biotechnology Co 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.| Sunmax Biotechnology vs. OBI Pharma | Sunmax Biotechnology vs. Tanvex BioPharma | Sunmax Biotechnology vs. Adimmune 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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