Correlation Between China Pharma and China SXT
Can any of the company-specific risk be diversified away by investing in both China Pharma and China SXT 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 Pharma and China SXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Pharma Holdings and China SXT Pharmaceuticals, you can compare the effects of market volatilities on China Pharma and China SXT 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 Pharma with a short position of China SXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Pharma and China SXT.
Diversification Opportunities for China Pharma and China SXT
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and China is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Pharma Holdings and China SXT Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China SXT Pharmaceuticals and China 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 China Pharma Holdings are associated (or correlated) with China SXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China SXT Pharmaceuticals has no effect on the direction of China Pharma i.e., China Pharma and China SXT go up and down completely randomly.
Pair Corralation between China Pharma and China SXT
Given the investment horizon of 90 days China Pharma Holdings is expected to under-perform the China SXT. But the stock apears to be less risky and, when comparing its historical volatility, China Pharma Holdings is 1.34 times less risky than China SXT. The stock trades about -0.08 of its potential returns per unit of risk. The China SXT Pharmaceuticals is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,750 in China SXT Pharmaceuticals on August 24, 2024 and sell it today you would lose (1,712) from holding China SXT Pharmaceuticals or give up 97.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Pharma Holdings vs. China SXT Pharmaceuticals
Performance |
| Timeline |
| China Pharma Holdings |
| China SXT Pharmaceuticals |
China Pharma and China SXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Pharma and China SXT
The main advantage of trading using opposite China Pharma and China SXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Pharma position performs unexpectedly, China SXT 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 China SXT will offset losses from the drop in China SXT's long position.| China Pharma vs. Universe Pharmaceuticals | China Pharma vs. Sonoma Pharmaceuticals | China Pharma vs. Akanda Corp | China Pharma vs. Halo Collective |
| China SXT vs. Akanda Corp | China SXT vs. Petros Pharmaceuticals | China SXT vs. GelStat Corp | China SXT vs. Shuttle Pharmaceuticals |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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