Correlation Between Sihuan Pharmaceutical and Procaps Group
Can any of the company-specific risk be diversified away by investing in both Sihuan Pharmaceutical and Procaps 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 Sihuan Pharmaceutical and Procaps Group 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 Procaps Group SA, you can compare the effects of market volatilities on Sihuan Pharmaceutical and Procaps 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 Sihuan Pharmaceutical with a short position of Procaps Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sihuan Pharmaceutical and Procaps Group.
Diversification Opportunities for Sihuan Pharmaceutical and Procaps Group
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sihuan and Procaps is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sihuan Pharmaceutical Holdings and Procaps Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procaps Group SA 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 Procaps Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procaps Group SA has no effect on the direction of Sihuan Pharmaceutical i.e., Sihuan Pharmaceutical and Procaps Group go up and down completely randomly.
Pair Corralation between Sihuan Pharmaceutical and Procaps Group
Assuming the 90 days horizon Sihuan Pharmaceutical Holdings is expected to generate 1.4 times more return on investment than Procaps Group. However, Sihuan Pharmaceutical is 1.4 times more volatile than Procaps Group SA. It trades about 0.05 of its potential returns per unit of risk. Procaps Group SA is currently generating about -0.03 per unit of risk. If you would invest 8.50 in Sihuan Pharmaceutical Holdings on August 24, 2024 and sell it today you would earn a total of 1.00 from holding Sihuan Pharmaceutical Holdings or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.34% |
| Values | Daily Returns |
Sihuan Pharmaceutical Holdings vs. Procaps Group SA
Performance |
| Timeline |
| Sihuan Pharmaceutical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Procaps Group SA |
Sihuan Pharmaceutical and Procaps Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sihuan Pharmaceutical and Procaps Group
The main advantage of trading using opposite Sihuan Pharmaceutical and Procaps Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sihuan Pharmaceutical position performs unexpectedly, Procaps 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 Procaps Group will offset losses from the drop in Procaps Group'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 |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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