Correlation Between Sunshine Biopharma and China Infrastructure

Can any of the company-specific risk be diversified away by investing in both Sunshine Biopharma and China Infrastructure 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 Sunshine Biopharma and China Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sunshine Biopharma Warrant and China Infrastructure Construction, you can compare the effects of market volatilities on Sunshine Biopharma and China Infrastructure 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 Sunshine Biopharma with a short position of China Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunshine Biopharma and China Infrastructure.

Diversification Opportunities for Sunshine Biopharma and China Infrastructure

-0.37

Correlation Coefficient

Sunshine Biopharma  China Infrastructure

Very good diversification

The 3 months correlation between Sunshine and China is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sunshine Biopharma Warrant and China Infrastructure Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Infrastructure and Sunshine Biopharma 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 Sunshine Biopharma Warrant are associated (or correlated) with China Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Infrastructure has no effect on the direction of Sunshine Biopharma i.e., Sunshine Biopharma and China Infrastructure go up and down completely randomly.

Pair Corralation between Sunshine Biopharma and China Infrastructure

If you would invest  11.00  in Sunshine Biopharma Warrant on September 12, 2024 and sell it today you would earn a total of  11.80  from holding Sunshine Biopharma Warrant or generate 107.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.75%
Values	Daily Returns

Sunshine Biopharma Warrant  vs.  China Infrastructure Construct

Sunshine Biopharma

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sunshine Biopharma Warrant are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting primary indicators, Sunshine Biopharma showed solid returns over the last few months and may actually be approaching a breakup point.

China Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Infrastructure Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, China Infrastructure is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Sunshine Biopharma and China Infrastructure

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

The idea behind Sunshine Biopharma Warrant and China Infrastructure Construction 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.