Correlation Between Sino Biopharmaceutica and Biotron

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

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

Diversification Opportunities for Sino Biopharmaceutica and Biotron

0.14

Correlation Coefficient

Sino Biopharmaceutica  Biotron

Average diversification

The 3 months correlation between Sino and Biotron is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Ltd and Biotron Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotron Limited and Sino Biopharmaceutica 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 Sino Biopharmaceutical Ltd are associated (or correlated) with Biotron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotron Limited has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Biotron go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Biotron

Assuming the 90 days horizon Sino Biopharmaceutical Ltd is expected to generate 0.51 times more return on investment than Biotron. However, Sino Biopharmaceutical Ltd is 1.96 times less risky than Biotron. It trades about 0.08 of its potential returns per unit of risk. Biotron Limited is currently generating about 0.02 per unit of risk. If you would invest  800.00  in Sino Biopharmaceutical Ltd on September 14, 2024 and sell it today you would earn a total of  105.00  from holding Sino Biopharmaceutical Ltd or generate 13.13% return on investment over 90 days.

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

Sino Biopharmaceutical Ltd  vs.  Biotron Limited

Sino Biopharmaceutical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Sino Biopharmaceutica showed solid returns over the last few months and may actually be approaching a breakup point.

Biotron Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biotron Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Biotron may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sino Biopharmaceutica and Biotron

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

The idea behind Sino Biopharmaceutical Ltd and Biotron 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.