Correlation Between China Pharma and SIGA Technologies

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

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

Diversification Opportunities for China Pharma and SIGA Technologies

-0.48

Correlation Coefficient

China Pharma  SIGA Technologies

Very good diversification

The 3 months correlation between China and SIGA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding China Pharma Holdings and SIGA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGA Technologies and China Pharma 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 China Pharma Holdings are associated (or correlated) with SIGA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGA Technologies has no effect on the direction of China Pharma i.e., China Pharma and SIGA Technologies go up and down completely randomly.

Pair Corralation between China Pharma and SIGA Technologies

Given the investment horizon of 90 days China Pharma Holdings is expected to under-perform the SIGA Technologies. In addition to that, China Pharma is 1.07 times more volatile than SIGA Technologies. It trades about -0.07 of its total potential returns per unit of risk. SIGA Technologies is currently generating about 0.14 per unit of volatility. If you would invest  496.00  in SIGA Technologies on February 23, 2024 and sell it today you would earn a total of  249.00  from holding SIGA Technologies or generate 50.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

China Pharma Holdings  vs.  SIGA Technologies

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 unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SIGA Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SIGA Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical and fundamental indicators, SIGA Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Pharma and SIGA Technologies

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

The idea behind China Pharma Holdings and SIGA Technologies 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 Commodity Directory module to find actively traded commodities issued by global exchanges.