Correlation Between Hisamitsu Pharmaceutical and CanSino Biologics
Can any of the company-specific risk be diversified away by investing in both Hisamitsu Pharmaceutical and CanSino Biologics 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 Hisamitsu Pharmaceutical and CanSino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hisamitsu Pharmaceutical Co and CanSino Biologics, you can compare the effects of market volatilities on Hisamitsu Pharmaceutical and CanSino Biologics 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 Hisamitsu Pharmaceutical with a short position of CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hisamitsu Pharmaceutical and CanSino Biologics.
Diversification Opportunities for Hisamitsu Pharmaceutical and CanSino Biologics
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hisamitsu and CanSino is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hisamitsu Pharmaceutical Co and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and Hisamitsu Pharmaceutical 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 Hisamitsu Pharmaceutical Co are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Hisamitsu Pharmaceutical i.e., Hisamitsu Pharmaceutical and CanSino Biologics go up and down completely randomly.
Pair Corralation between Hisamitsu Pharmaceutical and CanSino Biologics
Assuming the 90 days horizon Hisamitsu Pharmaceutical is expected to generate 16.31 times less return on investment than CanSino Biologics. But when comparing it to its historical volatility, Hisamitsu Pharmaceutical Co is 2.9 times less risky than CanSino Biologics. It trades about 0.02 of its potential returns per unit of risk. CanSino Biologics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 250.00 in CanSino Biologics on September 26, 2024 and sell it today you would earn a total of 114.00 from holding CanSino Biologics or generate 45.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hisamitsu Pharmaceutical Co vs. CanSino Biologics
Performance |
| Timeline |
| Hisamitsu Pharmaceutical |
| CanSino Biologics |
Hisamitsu Pharmaceutical and CanSino Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hisamitsu Pharmaceutical and CanSino Biologics
The main advantage of trading using opposite Hisamitsu Pharmaceutical and CanSino Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hisamitsu Pharmaceutical position performs unexpectedly, CanSino Biologics 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 CanSino Biologics will offset losses from the drop in CanSino Biologics' long position.The idea behind Hisamitsu Pharmaceutical Co and CanSino Biologics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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