Correlation Between China SXT and Regencell Bioscience

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

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

Diversification Opportunities for China SXT and Regencell Bioscience

0.44

Correlation Coefficient

China SXT  Regencell Bioscience

Very weak diversification

The 3 months correlation between China and Regencell is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding China SXT Pharmaceuticals and Regencell Bioscience Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regencell Bioscience and China SXT 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 SXT Pharmaceuticals are associated (or correlated) with Regencell Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regencell Bioscience has no effect on the direction of China SXT i.e., China SXT and Regencell Bioscience go up and down completely randomly.

Pair Corralation between China SXT and Regencell Bioscience

Given the investment horizon of 90 days China SXT Pharmaceuticals is expected to generate 8.32 times more return on investment than Regencell Bioscience. However, China SXT is 8.32 times more volatile than Regencell Bioscience Holdings. It trades about 0.03 of its potential returns per unit of risk. Regencell Bioscience Holdings is currently generating about -0.03 per unit of risk. If you would invest  380.00  in China SXT Pharmaceuticals on January 31, 2024 and sell it today you would lose (277.00) from holding China SXT Pharmaceuticals or give up 72.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

China SXT Pharmaceuticals  vs.  Regencell Bioscience Holdings

China SXT Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China SXT Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Regencell Bioscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regencell Bioscience Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with China SXT and Regencell Bioscience

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

The idea behind China SXT Pharmaceuticals and Regencell Bioscience 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.