Correlation Between Sino Biopharmaceutica and Biocardia

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

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

Diversification Opportunities for Sino Biopharmaceutica and Biocardia

0.1

Correlation Coefficient

Sino Biopharmaceutica  Biocardia

Average diversification

The 3 months correlation between Sino and Biocardia is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Limited and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia 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 Limited are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Biocardia go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Biocardia

Assuming the 90 days horizon Sino Biopharmaceutical Limited is expected to under-perform the Biocardia. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sino Biopharmaceutical Limited is 1.95 times less risky than Biocardia. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Biocardia is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  185.00  in Biocardia on September 16, 2024 and sell it today you would earn a total of  23.00  from holding Biocardia or generate 12.43% return on investment over 90 days.

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

Sino Biopharmaceutical Limited  vs.  Biocardia

Sino Biopharmaceutical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Sino Biopharmaceutica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia 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 fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sino Biopharmaceutica and Biocardia

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

The idea behind Sino Biopharmaceutical Limited and Biocardia 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.