Correlation Between Shanghai Fosun and Provectus Biopharmaceutica

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Can any of the company-specific risk be diversified away by investing in both Shanghai Fosun and Provectus Biopharmaceutica 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 Shanghai Fosun and Provectus Biopharmaceutica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shanghai Fosun Pharmaceutical and Provectus Biopharmaceuticals, you can compare the effects of market volatilities on Shanghai Fosun and Provectus Biopharmaceutica 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 Shanghai Fosun with a short position of Provectus Biopharmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Fosun and Provectus Biopharmaceutica.

Diversification Opportunities for Shanghai Fosun and Provectus Biopharmaceutica

-0.8
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Shanghai and Provectus is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Fosun Pharmaceutical and Provectus Biopharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provectus Biopharmaceutica and Shanghai Fosun 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 Shanghai Fosun Pharmaceutical are associated (or correlated) with Provectus Biopharmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provectus Biopharmaceutica has no effect on the direction of Shanghai Fosun i.e., Shanghai Fosun and Provectus Biopharmaceutica go up and down completely randomly.

Pair Corralation between Shanghai Fosun and Provectus Biopharmaceutica

Assuming the 90 days horizon Shanghai Fosun Pharmaceutical is expected to under-perform the Provectus Biopharmaceutica. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shanghai Fosun Pharmaceutical is 2.27 times less risky than Provectus Biopharmaceutica. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Provectus Biopharmaceuticals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.89  in Provectus Biopharmaceuticals on December 30, 2023 and sell it today you would earn a total of  5.11  from holding Provectus Biopharmaceuticals or generate 86.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy91.86%
ValuesDaily Returns

Shanghai Fosun Pharmaceutical  vs.  Provectus Biopharmaceuticals

 Performance 
       Timeline  
Shanghai Fosun Pharm 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Shanghai Fosun Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Provectus Biopharmaceutica 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Weak
Over the last 90 days Provectus Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile fundamental indicators, Provectus Biopharmaceutica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shanghai Fosun and Provectus Biopharmaceutica Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shanghai Fosun and Provectus Biopharmaceutica

The main advantage of trading using opposite Shanghai Fosun and Provectus Biopharmaceutica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Fosun position performs unexpectedly, Provectus Biopharmaceutica 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 Provectus Biopharmaceutica will offset losses from the drop in Provectus Biopharmaceutica's long position.
The idea behind Shanghai Fosun Pharmaceutical and Provectus Biopharmaceuticals 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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