Correlation Between Sihuan Pharmaceutical and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both Sihuan Pharmaceutical and Maple Leaf 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 Sihuan Pharmaceutical and Maple Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sihuan Pharmaceutical Holdings and Maple Leaf Green, you can compare the effects of market volatilities on Sihuan Pharmaceutical and Maple Leaf 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 Sihuan Pharmaceutical with a short position of Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sihuan Pharmaceutical and Maple Leaf.
Diversification Opportunities for Sihuan Pharmaceutical and Maple Leaf
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sihuan and Maple is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sihuan Pharmaceutical Holdings and Maple Leaf Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Green and Sihuan Pharmaceutical 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 Sihuan Pharmaceutical Holdings are associated (or correlated) with Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Green has no effect on the direction of Sihuan Pharmaceutical i.e., Sihuan Pharmaceutical and Maple Leaf go up and down completely randomly.
Pair Corralation between Sihuan Pharmaceutical and Maple Leaf
Assuming the 90 days horizon Sihuan Pharmaceutical is expected to generate 16.31 times less return on investment than Maple Leaf. But when comparing it to its historical volatility, Sihuan Pharmaceutical Holdings is 4.49 times less risky than Maple Leaf. It trades about 0.02 of its potential returns per unit of risk. Maple Leaf Green is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2.40 in Maple Leaf Green on August 31, 2024 and sell it today you would earn a total of 0.80 from holding Maple Leaf Green or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.5% |
| Values | Daily Returns |
Sihuan Pharmaceutical Holdings vs. Maple Leaf Green
Performance |
| Timeline |
| Sihuan Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Maple Leaf Green |
Sihuan Pharmaceutical and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sihuan Pharmaceutical and Maple Leaf
The main advantage of trading using opposite Sihuan Pharmaceutical and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sihuan Pharmaceutical position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| Sihuan Pharmaceutical vs. Procaps Group SA | Sihuan Pharmaceutical vs. Phibro Animal Health | Sihuan Pharmaceutical vs. Cann American Corp | Sihuan Pharmaceutical vs. Shuttle Pharmaceuticals |
| Maple Leaf vs. Brainsway | Maple Leaf vs. Venus Concept | Maple Leaf vs. Tactile Systems Technology | Maple Leaf vs. Icecure Medical |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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