Correlation Between Sinochem International and Shenzhen Bioeasy
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By analyzing existing cross correlation between Sinochem International Corp and Shenzhen Bioeasy Biotechnology, you can compare the effects of market volatilities on Sinochem International and Shenzhen Bioeasy 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 Sinochem International with a short position of Shenzhen Bioeasy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinochem International and Shenzhen Bioeasy.
Diversification Opportunities for Sinochem International and Shenzhen Bioeasy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sinochem and Shenzhen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sinochem International Corp and Shenzhen Bioeasy Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Bioeasy Bio and Sinochem International 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 Sinochem International Corp are associated (or correlated) with Shenzhen Bioeasy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Bioeasy Bio has no effect on the direction of Sinochem International i.e., Sinochem International and Shenzhen Bioeasy go up and down completely randomly.
Pair Corralation between Sinochem International and Shenzhen Bioeasy
Assuming the 90 days trading horizon Sinochem International is expected to generate 2.33 times less return on investment than Shenzhen Bioeasy. But when comparing it to its historical volatility, Sinochem International Corp is 1.97 times less risky than Shenzhen Bioeasy. It trades about 0.0 of its potential returns per unit of risk. Shenzhen Bioeasy Biotechnology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,218 in Shenzhen Bioeasy Biotechnology on September 4, 2024 and sell it today you would lose (211.00) from holding Shenzhen Bioeasy Biotechnology or give up 17.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sinochem International Corp vs. Shenzhen Bioeasy Biotechnology
Performance |
| Timeline |
| Sinochem International |
| Shenzhen Bioeasy Bio |
Sinochem International and Shenzhen Bioeasy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sinochem International and Shenzhen Bioeasy
The main advantage of trading using opposite Sinochem International and Shenzhen Bioeasy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinochem International position performs unexpectedly, Shenzhen Bioeasy 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 Shenzhen Bioeasy will offset losses from the drop in Shenzhen Bioeasy's long position.The idea behind Sinochem International Corp and Shenzhen Bioeasy Biotechnology 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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