Correlation Between SIMCERE PHARMAC and COPLAND ROAD

Can any of the company-specific risk be diversified away by investing in both SIMCERE PHARMAC and COPLAND ROAD 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 SIMCERE PHARMAC and COPLAND ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIMCERE PHARMAC GRP and COPLAND ROAD CAPITAL, you can compare the effects of market volatilities on SIMCERE PHARMAC and COPLAND ROAD 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 SIMCERE PHARMAC with a short position of COPLAND ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMCERE PHARMAC and COPLAND ROAD.

Diversification Opportunities for SIMCERE PHARMAC and COPLAND ROAD

-0.2

Correlation Coefficient

SIMCERE PHARMAC  COPLAND ROAD

Good diversification

The 3 months correlation between SIMCERE and COPLAND is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding SIMCERE PHARMAC GRP and COPLAND ROAD CAPITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPLAND ROAD CAPITAL and SIMCERE PHARMAC 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 SIMCERE PHARMAC GRP are associated (or correlated) with COPLAND ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPLAND ROAD CAPITAL has no effect on the direction of SIMCERE PHARMAC i.e., SIMCERE PHARMAC and COPLAND ROAD go up and down completely randomly.

Pair Corralation between SIMCERE PHARMAC and COPLAND ROAD

Assuming the 90 days horizon SIMCERE PHARMAC is expected to generate 6.47 times less return on investment than COPLAND ROAD. In addition to that, SIMCERE PHARMAC is 1.04 times more volatile than COPLAND ROAD CAPITAL. It trades about 0.04 of its total potential returns per unit of risk. COPLAND ROAD CAPITAL is currently generating about 0.25 per unit of volatility. If you would invest  3,995  in COPLAND ROAD CAPITAL on September 26, 2024 and sell it today you would earn a total of  440.00  from holding COPLAND ROAD CAPITAL or generate 11.01% return on investment over 90 days.

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

SIMCERE PHARMAC GRP  vs.  COPLAND ROAD CAPITAL

SIMCERE PHARMAC GRP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SIMCERE PHARMAC GRP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SIMCERE PHARMAC reported solid returns over the last few months and may actually be approaching a breakup point.

COPLAND ROAD CAPITAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COPLAND ROAD CAPITAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, COPLAND ROAD is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SIMCERE PHARMAC and COPLAND ROAD

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

The idea behind SIMCERE PHARMAC GRP and COPLAND ROAD CAPITAL 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.