Correlation Between Sino Biopharmaceutica and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Sino Biopharmaceutica and Rio Tinto 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 Sino Biopharmaceutica and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino Biopharmaceutical Limited and Rio Tinto PLC, you can compare the effects of market volatilities on Sino Biopharmaceutica and Rio Tinto 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 Sino Biopharmaceutica with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Biopharmaceutica and Rio Tinto.
Diversification Opportunities for Sino Biopharmaceutica and Rio Tinto
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sino and Rio is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Limited and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and Sino Biopharmaceutica 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 Sino Biopharmaceutical Limited are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and Rio Tinto go up and down completely randomly.
Pair Corralation between Sino Biopharmaceutica and Rio Tinto
Assuming the 90 days horizon Sino Biopharmaceutical Limited is expected to under-perform the Rio Tinto. In addition to that, Sino Biopharmaceutica is 3.66 times more volatile than Rio Tinto PLC. It trades about -0.07 of its total potential returns per unit of risk. Rio Tinto PLC is currently generating about 0.17 per unit of volatility. If you would invest 854,150 in Rio Tinto PLC on January 24, 2024 and sell it today you would earn a total of 40,250 from holding Rio Tinto PLC or generate 4.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Sino Biopharmaceutical Limited vs. Rio Tinto PLC
Performance |
| Timeline |
| Sino Biopharmaceutical |
| Rio Tinto PLC |
Sino Biopharmaceutica and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino Biopharmaceutica and Rio Tinto
The main advantage of trading using opposite Sino Biopharmaceutica and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino Biopharmaceutica position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Sino Biopharmaceutica vs. biOasis Technologies | Sino Biopharmaceutica vs. Covalon Technologies | Sino Biopharmaceutica vs. Ceapro Inc | Sino Biopharmaceutica vs. Resverlogix Corp |
| Rio Tinto vs. Transportadora de Gas | Rio Tinto vs. Compania de Transporte | Rio Tinto vs. Telecom Argentina |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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