Correlation Between Bank Negara and SINOPHARM GROUP
Can any of the company-specific risk be diversified away by investing in both Bank Negara 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 Bank Negara and SINOPHARM GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Negara Indonesia and SINOPHARM GROUP LTD, you can compare the effects of market volatilities on Bank Negara 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 Bank Negara with a short position of SINOPHARM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and SINOPHARM GROUP.
Diversification Opportunities for Bank Negara and SINOPHARM GROUP
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and SINOPHARM is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia 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 Bank Negara 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 Bank Negara Indonesia 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 Bank Negara i.e., Bank Negara and SINOPHARM GROUP go up and down completely randomly.
Pair Corralation between Bank Negara and SINOPHARM GROUP
Assuming the 90 days horizon Bank Negara Indonesia is expected to under-perform the SINOPHARM GROUP. In addition to that, Bank Negara is 1.87 times more volatile than SINOPHARM GROUP LTD. It trades about -0.04 of its total potential returns per unit of risk. SINOPHARM GROUP LTD is currently generating about 0.13 per unit of volatility. If you would invest 1,256 in SINOPHARM GROUP LTD on August 31, 2024 and sell it today you would earn a total of 75.00 from holding SINOPHARM GROUP LTD or generate 5.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. SINOPHARM GROUP LTD
Performance |
| Timeline |
| Bank Negara Indonesia |
| SINOPHARM GROUP LTD |
Bank Negara and SINOPHARM GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and SINOPHARM GROUP
The main advantage of trading using opposite Bank Negara and SINOPHARM GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara 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.| Bank Negara vs. Banco Bradesco SA | Bank Negara vs. Itau Unibanco Banco | Bank Negara vs. Lloyds Banking Group | Bank Negara vs. Deutsche Bank AG |
| SINOPHARM GROUP vs. McKesson | SINOPHARM GROUP vs. Cardinal Health | SINOPHARM GROUP vs. Henry Schein | 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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