Correlation Between CanSino Biologics and Teva Pharma

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

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

Diversification Opportunities for CanSino Biologics and Teva Pharma

-0.4

Correlation Coefficient

CanSino Biologics  Teva Pharma

Very good diversification

The 3 months correlation between CanSino and Teva is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CanSino Biologics and Teva Pharma Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharma Industries and CanSino Biologics 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 CanSino Biologics are associated (or correlated) with Teva Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharma Industries has no effect on the direction of CanSino Biologics i.e., CanSino Biologics and Teva Pharma go up and down completely randomly.

Pair Corralation between CanSino Biologics and Teva Pharma

Assuming the 90 days horizon CanSino Biologics is expected to under-perform the Teva Pharma. In addition to that, CanSino Biologics is 1.58 times more volatile than Teva Pharma Industries. It trades about -0.08 of its total potential returns per unit of risk. Teva Pharma Industries is currently generating about 0.11 per unit of volatility. If you would invest  856.00  in Teva Pharma Industries on January 24, 2024 and sell it today you would earn a total of  430.00  from holding Teva Pharma Industries or generate 50.23% return on investment over 90 days.

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

CanSino Biologics  vs.  Teva Pharma Industries

CanSino Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CanSino Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, CanSino Biologics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Teva Pharma Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teva Pharma Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Teva Pharma may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with CanSino Biologics and Teva Pharma

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

The idea behind CanSino Biologics and Teva Pharma Industries 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.