Correlation Between Sino Biopharmaceutica and LENZ Therapeutics

Can any of the company-specific risk be diversified away by investing in both Sino Biopharmaceutica and LENZ Therapeutics 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 LENZ Therapeutics 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 LENZ Therapeutics, you can compare the effects of market volatilities on Sino Biopharmaceutica and LENZ Therapeutics 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 LENZ Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino Biopharmaceutica and LENZ Therapeutics.

Diversification Opportunities for Sino Biopharmaceutica and LENZ Therapeutics

0.59

Correlation Coefficient

Sino Biopharmaceutica  LENZ Therapeutics

Very weak diversification

The 3 months correlation between Sino and LENZ is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sino Biopharmaceutical Limited and LENZ Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENZ Therapeutics 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 LENZ Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENZ Therapeutics has no effect on the direction of Sino Biopharmaceutica i.e., Sino Biopharmaceutica and LENZ Therapeutics go up and down completely randomly.

Pair Corralation between Sino Biopharmaceutica and LENZ Therapeutics

Assuming the 90 days horizon Sino Biopharmaceutical Limited is expected to generate 1.2 times more return on investment than LENZ Therapeutics. However, Sino Biopharmaceutica is 1.2 times more volatile than LENZ Therapeutics. It trades about 0.28 of its potential returns per unit of risk. LENZ Therapeutics is currently generating about 0.1 per unit of risk. If you would invest  49.00  in Sino Biopharmaceutical Limited on May 7, 2025 and sell it today you would earn a total of  50.00  from holding Sino Biopharmaceutical Limited or generate 102.04% return on investment over 90 days.

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

Sino Biopharmaceutical Limited  vs.  LENZ Therapeutics

Sino Biopharmaceutical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sino Biopharmaceutical Limited are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Sino Biopharmaceutica reported solid returns over the last few months and may actually be approaching a breakup point.

LENZ Therapeutics

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in LENZ Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, LENZ Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sino Biopharmaceutica and LENZ Therapeutics

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

The idea behind Sino Biopharmaceutical Limited and LENZ Therapeutics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.