Correlation Between SIMCERE PHARMAC and Carsales
Can any of the company-specific risk be diversified away by investing in both SIMCERE PHARMAC and Carsales 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 SIMCERE PHARMAC and Carsales into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIMCERE PHARMAC GRP and Carsales, you can compare the effects of market volatilities on SIMCERE PHARMAC and Carsales 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 SIMCERE PHARMAC with a short position of Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMCERE PHARMAC and Carsales.
Diversification Opportunities for SIMCERE PHARMAC and Carsales
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SIMCERE and Carsales is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SIMCERE PHARMAC GRP and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales and SIMCERE PHARMAC 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 SIMCERE PHARMAC GRP are associated (or correlated) with Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of SIMCERE PHARMAC i.e., SIMCERE PHARMAC and Carsales go up and down completely randomly.
Pair Corralation between SIMCERE PHARMAC and Carsales
Assuming the 90 days horizon SIMCERE PHARMAC GRP is expected to generate 1.89 times more return on investment than Carsales. However, SIMCERE PHARMAC is 1.89 times more volatile than Carsales. It trades about 0.06 of its potential returns per unit of risk. Carsales is currently generating about 0.09 per unit of risk. 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIMCERE PHARMAC GRP vs. Carsales
Performance |
| Timeline |
| SIMCERE PHARMAC GRP |
| Carsales |
SIMCERE PHARMAC and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIMCERE PHARMAC and Carsales
The main advantage of trading using opposite SIMCERE PHARMAC and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMCERE PHARMAC position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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