Correlation Between Shandong Sanyuan and Bloomage Biotechnology

Can any of the company-specific risk be diversified away by investing in both Shandong Sanyuan and Bloomage Biotechnology 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 Shandong Sanyuan and Bloomage Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shandong Sanyuan Biotechnology and Bloomage Biotechnology Corp, you can compare the effects of market volatilities on Shandong Sanyuan and Bloomage Biotechnology 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 Shandong Sanyuan with a short position of Bloomage Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Sanyuan and Bloomage Biotechnology.

Diversification Opportunities for Shandong Sanyuan and Bloomage Biotechnology

0.83

Correlation Coefficient

Shandong Sanyuan  Bloomage Biotechnology

Very poor diversification

The 3 months correlation between Shandong and Bloomage is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Sanyuan Biotechnology and Bloomage Biotechnology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomage Biotechnology and Shandong Sanyuan 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 Shandong Sanyuan Biotechnology are associated (or correlated) with Bloomage Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomage Biotechnology has no effect on the direction of Shandong Sanyuan i.e., Shandong Sanyuan and Bloomage Biotechnology go up and down completely randomly.

Pair Corralation between Shandong Sanyuan and Bloomage Biotechnology

Assuming the 90 days trading horizon Shandong Sanyuan Biotechnology is expected to generate 1.01 times more return on investment than Bloomage Biotechnology. However, Shandong Sanyuan is 1.01 times more volatile than Bloomage Biotechnology Corp. It trades about 0.07 of its potential returns per unit of risk. Bloomage Biotechnology Corp is currently generating about -0.19 per unit of risk. If you would invest  2,723  in Shandong Sanyuan Biotechnology on September 28, 2024 and sell it today you would earn a total of  77.00  from holding Shandong Sanyuan Biotechnology or generate 2.83% return on investment over 90 days.

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

Shandong Sanyuan Biotechnology  vs.  Bloomage Biotechnology Corp

Shandong Sanyuan Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shandong Sanyuan Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shandong Sanyuan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bloomage Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bloomage Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Shandong Sanyuan and Bloomage Biotechnology

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

The idea behind Shandong Sanyuan Biotechnology and Bloomage Biotechnology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.