Correlation Between HEMISPHERE EGY and SIMCERE PHARMAC
Can any of the company-specific risk be diversified away by investing in both HEMISPHERE EGY and SIMCERE PHARMAC 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 HEMISPHERE EGY and SIMCERE PHARMAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEMISPHERE EGY and SIMCERE PHARMAC GRP, you can compare the effects of market volatilities on HEMISPHERE EGY and SIMCERE PHARMAC 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 HEMISPHERE EGY with a short position of SIMCERE PHARMAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEMISPHERE EGY and SIMCERE PHARMAC.
Diversification Opportunities for HEMISPHERE EGY and SIMCERE PHARMAC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEMISPHERE and SIMCERE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and SIMCERE PHARMAC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMCERE PHARMAC GRP and HEMISPHERE EGY 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 HEMISPHERE EGY are associated (or correlated) with SIMCERE PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMCERE PHARMAC GRP has no effect on the direction of HEMISPHERE EGY i.e., HEMISPHERE EGY and SIMCERE PHARMAC go up and down completely randomly.
Pair Corralation between HEMISPHERE EGY and SIMCERE PHARMAC
Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 1.1 times less return on investment than SIMCERE PHARMAC. But when comparing it to its historical volatility, HEMISPHERE EGY is 2.13 times less risky than SIMCERE PHARMAC. It trades about 0.14 of its potential returns per unit of risk. SIMCERE PHARMAC GRP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 55.00 in SIMCERE PHARMAC GRP on September 12, 2024 and sell it today you would earn a total of 30.00 from holding SIMCERE PHARMAC GRP or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEMISPHERE EGY vs. SIMCERE PHARMAC GRP
Performance |
| Timeline |
| HEMISPHERE EGY |
| SIMCERE PHARMAC GRP |
HEMISPHERE EGY and SIMCERE PHARMAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEMISPHERE EGY and SIMCERE PHARMAC
The main advantage of trading using opposite HEMISPHERE EGY and SIMCERE PHARMAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEMISPHERE EGY position performs unexpectedly, SIMCERE PHARMAC 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 SIMCERE PHARMAC will offset losses from the drop in SIMCERE PHARMAC's long position.| HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc | HEMISPHERE EGY vs. Apple Inc |
| SIMCERE PHARMAC vs. Carsales | SIMCERE PHARMAC vs. HEMISPHERE EGY | SIMCERE PHARMAC vs. Computershare Limited | SIMCERE PHARMAC vs. Gamma Communications plc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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