Correlation Between Alpha Teknova and China Pharma

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

By analyzing existing cross correlation between Alpha Teknova and China Pharma Holdings, you can compare the effects of market volatilities on Alpha Teknova and China 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 Alpha Teknova with a short position of China Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Teknova and China Pharma.

Diversification Opportunities for Alpha Teknova and China Pharma

-0.23

Correlation Coefficient

Alpha Teknova  China Pharma

Very good diversification

The 3 months correlation between Alpha and China is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Teknova and China Pharma Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pharma Holdings and Alpha Teknova 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 Alpha Teknova are associated (or correlated) with China Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pharma Holdings has no effect on the direction of Alpha Teknova i.e., Alpha Teknova and China Pharma go up and down completely randomly.

Pair Corralation between Alpha Teknova and China Pharma

Given the investment horizon of 90 days Alpha Teknova is expected to generate 1.04 times more return on investment than China Pharma. However, Alpha Teknova is 1.04 times more volatile than China Pharma Holdings. It trades about 0.16 of its potential returns per unit of risk. China Pharma Holdings is currently generating about -0.01 per unit of risk. If you would invest  456.00  in Alpha Teknova on September 12, 2024 and sell it today you would earn a total of  320.00  from holding Alpha Teknova or generate 70.18% return on investment over 90 days.

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

Alpha Teknova  vs.  China Pharma Holdings

Alpha Teknova

Risk-Adjusted Performance

12 of 100

Good

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

China Pharma Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Pharma Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, China Pharma is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alpha Teknova and China Pharma

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

The idea behind Alpha Teknova and China Pharma Holdings 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.