Correlation Between Sino Biopharmaceutica and Oncology Pharma

Can any of the company-specific risk be diversified away by investing in both Sino Biopharmaceutica and Oncology Pharma 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 Oncology Pharma 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 Oncology Pharma, you can compare the effects of market volatilities on Sino Biopharmaceutica and Oncology Pharma 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 Oncology Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Biopharmaceutica and Oncology Pharma.

Diversification Opportunities for Sino Biopharmaceutica and Oncology Pharma

-0.44

Correlation Coefficient

Sino Biopharmaceutica  Oncology Pharma

Very good diversification

The 3 months correlation between Sino and Oncology is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Ltd and Oncology Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oncology Pharma 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 Oncology Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oncology Pharma has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Oncology Pharma go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Oncology Pharma

Assuming the 90 days horizon Sino Biopharmaceutica is expected to generate 561.39 times less return on investment than Oncology Pharma. But when comparing it to its historical volatility, Sino Biopharmaceutical Ltd is 132.6 times less risky than Oncology Pharma. It trades about 0.08 of its potential returns per unit of risk. Oncology Pharma is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Oncology Pharma on September 13, 2024 and sell it today you would earn a total of  0.01  from holding Oncology Pharma or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

Sino Biopharmaceutical Ltd  vs.  Oncology Pharma

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.

Oncology Pharma

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Oncology Pharma are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Oncology Pharma demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino Biopharmaceutica and Oncology Pharma

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

The idea behind Sino Biopharmaceutical Ltd and Oncology Pharma 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.