Correlation Between Sino Biopharmaceutica and Protagenic Therapeutics

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

Diversification Opportunities for Sino Biopharmaceutica and Protagenic Therapeutics

-0.26

Correlation Coefficient

Sino Biopharmaceutica  Protagenic Therapeutics

Very good diversification

The 3 months correlation between Sino and Protagenic is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Limited and Protagenic Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Protagenic Therapeutics 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 Protagenic Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Protagenic Therapeutics has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Protagenic Therapeutics go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and Protagenic Therapeutics

Assuming the 90 days horizon Sino Biopharmaceutica is expected to generate 35.11 times less return on investment than Protagenic Therapeutics. But when comparing it to its historical volatility, Sino Biopharmaceutical Limited is 11.76 times less risky than Protagenic Therapeutics. It trades about 0.07 of its potential returns per unit of risk. Protagenic Therapeutics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.91  in Protagenic Therapeutics on September 17, 2024 and sell it today you would earn a total of  0.49  from holding Protagenic Therapeutics or generate 53.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.56%
Values	Daily Returns

Sino Biopharmaceutical Limited  vs.  Protagenic Therapeutics

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.

Protagenic Therapeutics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Protagenic Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Protagenic Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino Biopharmaceutica and Protagenic Therapeutics

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

The idea behind Sino Biopharmaceutical Limited and Protagenic Therapeutics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.