Correlation Between Shandong Sanyuan and Maccura Biotechnology

Can any of the company-specific risk be diversified away by investing in both Shandong Sanyuan and Maccura Biotechnology 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 Shandong Sanyuan and Maccura Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shandong Sanyuan Biotechnology and Maccura Biotechnology Co, you can compare the effects of market volatilities on Shandong Sanyuan and Maccura Biotechnology 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 Shandong Sanyuan with a short position of Maccura Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Sanyuan and Maccura Biotechnology.

Diversification Opportunities for Shandong Sanyuan and Maccura Biotechnology

0.91

Correlation Coefficient

Shandong Sanyuan  Maccura Biotechnology

Almost no diversification

The 3 months correlation between Shandong and Maccura is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Sanyuan Biotechnology and Maccura Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maccura Biotechnology and Shandong Sanyuan 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 Shandong Sanyuan Biotechnology are associated (or correlated) with Maccura Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maccura Biotechnology has no effect on the direction of Shandong Sanyuan i.e., Shandong Sanyuan and Maccura Biotechnology go up and down completely randomly.

Pair Corralation between Shandong Sanyuan and Maccura Biotechnology

Assuming the 90 days trading horizon Shandong Sanyuan Biotechnology is expected to generate 1.3 times more return on investment than Maccura Biotechnology. However, Shandong Sanyuan is 1.3 times more volatile than Maccura Biotechnology Co. It trades about -0.04 of its potential returns per unit of risk. Maccura Biotechnology Co is currently generating about -0.15 per unit of risk. If you would invest  2,798  in Shandong Sanyuan Biotechnology on September 21, 2024 and sell it today you would lose (58.00) from holding Shandong Sanyuan Biotechnology or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Shandong Sanyuan Biotechnology  vs.  Maccura Biotechnology Co

Shandong Sanyuan Bio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Sanyuan Biotechnology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Sanyuan sustained solid returns over the last few months and may actually be approaching a breakup point.

Maccura Biotechnology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maccura Biotechnology Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maccura Biotechnology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shandong Sanyuan and Maccura Biotechnology

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

The idea behind Shandong Sanyuan Biotechnology and Maccura Biotechnology Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.