Correlation Between PsyBio Therapeutics and Sino Biopharmaceutica
Can any of the company-specific risk be diversified away by investing in both PsyBio Therapeutics 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 PsyBio Therapeutics and Sino Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PsyBio Therapeutics Corp and Sino Biopharmaceutical Limited, you can compare the effects of market volatilities on PsyBio Therapeutics 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 PsyBio Therapeutics with a short position of Sino Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of PsyBio Therapeutics and Sino Biopharmaceutica.
Diversification Opportunities for PsyBio Therapeutics and Sino Biopharmaceutica
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PsyBio and Sino is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding PsyBio Therapeutics Corp and Sino Biopharmaceutical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical and PsyBio Therapeutics 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 PsyBio Therapeutics Corp 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 PsyBio Therapeutics i.e., PsyBio Therapeutics and Sino Biopharmaceutica go up and down completely randomly.
Pair Corralation between PsyBio Therapeutics and Sino Biopharmaceutica
Assuming the 90 days horizon PsyBio Therapeutics Corp is expected to generate 9.06 times more return on investment than Sino Biopharmaceutica. However, PsyBio Therapeutics is 9.06 times more volatile than Sino Biopharmaceutical Limited. It trades about 0.05 of its potential returns per unit of risk. Sino Biopharmaceutical Limited is currently generating about 0.01 per unit of risk. If you would invest 3.40 in PsyBio Therapeutics Corp on September 2, 2024 and sell it today you would lose (3.39) from holding PsyBio Therapeutics Corp or give up 99.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 61.97% |
| Values | Daily Returns |
PsyBio Therapeutics Corp vs. Sino Biopharmaceutical Limited
Performance |
| Timeline |
| PsyBio Therapeutics Corp |
| Sino Biopharmaceutical |
PsyBio Therapeutics and Sino Biopharmaceutica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PsyBio Therapeutics and Sino Biopharmaceutica
The main advantage of trading using opposite PsyBio Therapeutics and Sino Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PsyBio Therapeutics 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.| PsyBio Therapeutics vs. Rigel Pharmaceuticals | PsyBio Therapeutics vs. Geron | PsyBio Therapeutics vs. Verastem | PsyBio Therapeutics vs. Immutep Ltd ADR |
| Sino Biopharmaceutica vs. Rigel Pharmaceuticals | Sino Biopharmaceutica vs. Geron | Sino Biopharmaceutica vs. Verastem | Sino Biopharmaceutica vs. Immutep Ltd ADR |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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