Correlation Between OBI Pharma and Ching Feng
Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Ching Feng 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 Ching Feng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OBI Pharma and Ching Feng Home, you can compare the effects of market volatilities on OBI Pharma and Ching Feng 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 Ching Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of OBI Pharma and Ching Feng.
Diversification Opportunities for OBI Pharma and Ching Feng
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OBI and Ching is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Ching Feng Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ching Feng Home 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 Ching Feng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ching Feng Home has no effect on the direction of OBI Pharma i.e., OBI Pharma and Ching Feng go up and down completely randomly.
Pair Corralation between OBI Pharma and Ching Feng
Assuming the 90 days trading horizon OBI Pharma is expected to generate 0.54 times more return on investment than Ching Feng. However, OBI Pharma is 1.86 times less risky than Ching Feng. It trades about -0.12 of its potential returns per unit of risk. Ching Feng Home is currently generating about -0.14 per unit of risk. If you would invest 6,580 in OBI Pharma on September 1, 2024 and sell it today you would lose (240.00) from holding OBI Pharma or give up 3.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OBI Pharma vs. Ching Feng Home
Performance |
| Timeline |
| OBI Pharma |
| Ching Feng Home |
OBI Pharma and Ching Feng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OBI Pharma and Ching Feng
The main advantage of trading using opposite OBI Pharma and Ching Feng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OBI Pharma position performs unexpectedly, Ching Feng 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 Ching Feng will offset losses from the drop in Ching Feng's long position.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
| Ching Feng vs. Chaintech Technology Corp | Ching Feng vs. AVerMedia Technologies | Ching Feng vs. Avision | Ching Feng vs. Clevo Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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