Correlation Between CSL and Sino Biopharmaceutica
Can any of the company-specific risk be diversified away by investing in both CSL and Sino Biopharmaceutica 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 CSL and Sino Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Sino Biopharmaceutical Ltd, you can compare the effects of market volatilities on CSL and Sino Biopharmaceutica 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 CSL with a short position of Sino Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Sino Biopharmaceutica.
Diversification Opportunities for CSL and Sino Biopharmaceutica
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CSL and Sino is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Sino Biopharmaceutical Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical and CSL 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 CSL are associated (or correlated) with Sino Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Biopharmaceutical has no effect on the direction of CSL i.e., CSL and Sino Biopharmaceutica go up and down completely randomly.
Pair Corralation between CSL and Sino Biopharmaceutica
Assuming the 90 days horizon CSL is expected to under-perform the Sino Biopharmaceutica. But the pink sheet apears to be less risky and, when comparing its historical volatility, CSL is 2.9 times less risky than Sino Biopharmaceutica. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Sino Biopharmaceutical Ltd is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,047 in Sino Biopharmaceutical Ltd on August 29, 2024 and sell it today you would lose (142.00) from holding Sino Biopharmaceutical Ltd or give up 13.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 62.09% |
| Values | Daily Returns |
CSL vs. Sino Biopharmaceutical Ltd
Performance |
| Timeline |
| CSL |
| Sino Biopharmaceutical |
CSL and Sino Biopharmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Sino Biopharmaceutica
The main advantage of trading using opposite CSL and Sino Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Sino Biopharmaceutica 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 Sino Biopharmaceutica will offset losses from the drop in Sino Biopharmaceutica's long position.The idea behind CSL and Sino Biopharmaceutical Ltd 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.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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