Correlation Between China SXT and Alimera Sciences
Can any of the company-specific risk be diversified away by investing in both China SXT and Alimera Sciences 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 Alimera Sciences 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 Alimera Sciences, you can compare the effects of market volatilities on China SXT and Alimera Sciences 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 Alimera Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of China SXT and Alimera Sciences.
Diversification Opportunities for China SXT and Alimera Sciences
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Alimera is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding China SXT Pharmaceuticals and Alimera Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimera Sciences 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 Alimera Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimera Sciences has no effect on the direction of China SXT i.e., China SXT and Alimera Sciences go up and down completely randomly.
Pair Corralation between China SXT and Alimera Sciences
Given the investment horizon of 90 days China SXT Pharmaceuticals is expected to generate 1.54 times more return on investment than Alimera Sciences. However, China SXT is 1.54 times more volatile than Alimera Sciences. It trades about 0.03 of its potential returns per unit of risk. Alimera Sciences is currently generating about -0.19 per unit of risk. If you would invest 106.00 in China SXT Pharmaceuticals on March 1, 2024 and sell it today you would earn a total of 0.00 from holding China SXT Pharmaceuticals or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
China SXT Pharmaceuticals vs. Alimera Sciences
Performance |
Timeline |
China SXT Pharmaceuticals |
Alimera Sciences |
China SXT and Alimera Sciences Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China SXT and Alimera Sciences
The main advantage of trading using opposite China SXT and Alimera Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China SXT position performs unexpectedly, Alimera Sciences 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 Alimera Sciences will offset losses from the drop in Alimera Sciences' long position.China SXT vs. Biofrontera | China SXT vs. Shuttle Pharmaceuticals | China SXT vs. Akanda Corp | China SXT vs. China Pharma Holdings |
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Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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