Correlation Between Alpha Cognition and Sino Biopharmaceutica

Can any of the company-specific risk be diversified away by investing in both Alpha Cognition and Sino Biopharmaceutica 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 Alpha Cognition and Sino Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Cognition and Sino Biopharmaceutical Limited, you can compare the effects of market volatilities on Alpha Cognition and Sino Biopharmaceutica 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 Alpha Cognition with a short position of Sino Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Cognition and Sino Biopharmaceutica.

Diversification Opportunities for Alpha Cognition and Sino Biopharmaceutica

0.16

Correlation Coefficient

Alpha Cognition  Sino Biopharmaceutica

Average diversification

The 3 months correlation between Alpha and Sino is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Cognition and Sino Biopharmaceutical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino Biopharmaceutical and Alpha Cognition 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 Alpha Cognition are associated (or correlated) with Sino Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino Biopharmaceutical has no effect on the direction of Alpha Cognition i.e., Alpha Cognition and Sino Biopharmaceutica go up and down completely randomly.

Pair Corralation between Alpha Cognition and Sino Biopharmaceutica

Assuming the 90 days horizon Alpha Cognition is expected to under-perform the Sino Biopharmaceutica. In addition to that, Alpha Cognition is 3.47 times more volatile than Sino Biopharmaceutical Limited. It trades about -0.03 of its total potential returns per unit of risk. Sino Biopharmaceutical Limited is currently generating about 0.11 per unit of volatility. If you would invest  38.00  in Sino Biopharmaceutical Limited on September 4, 2024 and sell it today you would earn a total of  7.00  from holding Sino Biopharmaceutical Limited or generate 18.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Alpha Cognition  vs.  Sino Biopharmaceutical Limited

Alpha Cognition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Cognition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sino Biopharmaceutical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Sino Biopharmaceutica reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha Cognition and Sino Biopharmaceutica

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

The idea behind Alpha Cognition and Sino Biopharmaceutical Limited 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.