Correlation Between Roche Holding and CSPC PHARMACEUTGR

Can any of the company-specific risk be diversified away by investing in both Roche Holding and CSPC PHARMACEUTGR 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 Roche Holding and CSPC PHARMACEUTGR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roche Holding Ltd and CSPC PHARMACEUTGR ADR4, you can compare the effects of market volatilities on Roche Holding and CSPC PHARMACEUTGR 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 Roche Holding with a short position of CSPC PHARMACEUTGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roche Holding and CSPC PHARMACEUTGR.

Diversification Opportunities for Roche Holding and CSPC PHARMACEUTGR

0.17

Correlation Coefficient

Roche Holding  CSPC PHARMACEUTGR

Average diversification

The 3 months correlation between Roche and CSPC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Roche Holding Ltd and CSPC PHARMACEUTGR ADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC PHARMACEUTGR ADR4 and Roche Holding 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 Roche Holding Ltd are associated (or correlated) with CSPC PHARMACEUTGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC PHARMACEUTGR ADR4 has no effect on the direction of Roche Holding i.e., Roche Holding and CSPC PHARMACEUTGR go up and down completely randomly.

Pair Corralation between Roche Holding and CSPC PHARMACEUTGR

Assuming the 90 days trading horizon Roche Holding is expected to generate 18.46 times less return on investment than CSPC PHARMACEUTGR. But when comparing it to its historical volatility, Roche Holding Ltd is 2.9 times less risky than CSPC PHARMACEUTGR. It trades about 0.03 of its potential returns per unit of risk. CSPC PHARMACEUTGR ADR4 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  243.00  in CSPC PHARMACEUTGR ADR4 on April 22, 2025 and sell it today you would earn a total of  129.00  from holding CSPC PHARMACEUTGR ADR4 or generate 53.09% return on investment over 90 days.

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

Roche Holding Ltd  vs.  CSPC PHARMACEUTGR ADR4

Roche Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Roche Holding Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Roche Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CSPC PHARMACEUTGR ADR4

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSPC PHARMACEUTGR ADR4 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, CSPC PHARMACEUTGR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roche Holding and CSPC PHARMACEUTGR

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

The idea behind Roche Holding Ltd and CSPC PHARMACEUTGR ADR4 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.