Correlation Between Sinphar Pharmaceutical and Lumax International

Can any of the company-specific risk be diversified away by investing in both Sinphar Pharmaceutical and Lumax International 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 Sinphar Pharmaceutical and Lumax International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sinphar Pharmaceutical Co and Lumax International Corp, you can compare the effects of market volatilities on Sinphar Pharmaceutical and Lumax International 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 Sinphar Pharmaceutical with a short position of Lumax International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sinphar Pharmaceutical and Lumax International.

Diversification Opportunities for Sinphar Pharmaceutical and Lumax International

0.73

Correlation Coefficient

Sinphar Pharmaceutical  Lumax International

Poor diversification

The 3 months correlation between Sinphar and Lumax is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sinphar Pharmaceutical Co and Lumax International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumax International Corp and Sinphar 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 Sinphar Pharmaceutical Co are associated (or correlated) with Lumax International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumax International Corp has no effect on the direction of Sinphar Pharmaceutical i.e., Sinphar Pharmaceutical and Lumax International go up and down completely randomly.

Pair Corralation between Sinphar Pharmaceutical and Lumax International

Assuming the 90 days trading horizon Sinphar Pharmaceutical Co is expected to under-perform the Lumax International. But the stock apears to be less risky and, when comparing its historical volatility, Sinphar Pharmaceutical Co is 1.85 times less risky than Lumax International. The stock trades about -0.2 of its potential returns per unit of risk. The Lumax International Corp is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  12,000  in Lumax International Corp on September 23, 2024 and sell it today you would lose (1,150) from holding Lumax International Corp or give up 9.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sinphar Pharmaceutical Co  vs.  Lumax International Corp

Sinphar Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sinphar Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Lumax International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumax International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Sinphar Pharmaceutical and Lumax International

The main advantage of trading using opposite Sinphar Pharmaceutical and Lumax International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sinphar Pharmaceutical position performs unexpectedly, Lumax International 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 Lumax International will offset losses from the drop in Lumax International's long position.

The idea behind Sinphar Pharmaceutical Co and Lumax International Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.