Correlation Between Main Street and SINOPHARM GROUP
Can any of the company-specific risk be diversified away by investing in both Main Street and SINOPHARM GROUP 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 Main Street and SINOPHARM GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and SINOPHARM GROUP LTD, you can compare the effects of market volatilities on Main Street and SINOPHARM GROUP 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 Main Street with a short position of SINOPHARM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and SINOPHARM GROUP.
Diversification Opportunities for Main Street and SINOPHARM GROUP
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Main and SINOPHARM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and SINOPHARM GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINOPHARM GROUP LTD and Main Street 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 Main Street Capital are associated (or correlated) with SINOPHARM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINOPHARM GROUP LTD has no effect on the direction of Main Street i.e., Main Street and SINOPHARM GROUP go up and down completely randomly.
Pair Corralation between Main Street and SINOPHARM GROUP
Given the investment horizon of 90 days Main Street Capital is expected to generate 0.37 times more return on investment than SINOPHARM GROUP. However, Main Street Capital is 2.67 times less risky than SINOPHARM GROUP. It trades about 0.14 of its potential returns per unit of risk. SINOPHARM GROUP LTD is currently generating about 0.02 per unit of risk. If you would invest 4,730 in Main Street Capital on September 2, 2024 and sell it today you would earn a total of 817.00 from holding Main Street Capital or generate 17.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. SINOPHARM GROUP LTD
Performance |
| Timeline |
| Main Street Capital |
| SINOPHARM GROUP LTD |
Main Street and SINOPHARM GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and SINOPHARM GROUP
The main advantage of trading using opposite Main Street and SINOPHARM GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, SINOPHARM GROUP 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 SINOPHARM GROUP will offset losses from the drop in SINOPHARM GROUP's long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| SINOPHARM GROUP vs. Cardinal Health | SINOPHARM GROUP vs. Henry Schein | SINOPHARM GROUP vs. Owens Minor | SINOPHARM GROUP vs. Patterson Companies |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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