Correlation Between Apex Biotechnology and Chung Lien
Can any of the company-specific risk be diversified away by investing in both Apex Biotechnology and Chung Lien 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 Apex Biotechnology and Chung Lien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apex Biotechnology Corp and Chung Lien Transportation, you can compare the effects of market volatilities on Apex Biotechnology and Chung Lien 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 Apex Biotechnology with a short position of Chung Lien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apex Biotechnology and Chung Lien.
Diversification Opportunities for Apex Biotechnology and Chung Lien
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apex and Chung is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apex Biotechnology Corp and Chung Lien Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Lien Transportation and Apex Biotechnology 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 Apex Biotechnology Corp are associated (or correlated) with Chung Lien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Lien Transportation has no effect on the direction of Apex Biotechnology i.e., Apex Biotechnology and Chung Lien go up and down completely randomly.
Pair Corralation between Apex Biotechnology and Chung Lien
Assuming the 90 days trading horizon Apex Biotechnology Corp is expected to under-perform the Chung Lien. In addition to that, Apex Biotechnology is 1.34 times more volatile than Chung Lien Transportation. It trades about -0.03 of its total potential returns per unit of risk. Chung Lien Transportation is currently generating about -0.01 per unit of volatility. If you would invest 4,215 in Chung Lien Transportation on August 29, 2024 and sell it today you would lose (10.00) from holding Chung Lien Transportation or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Apex Biotechnology Corp vs. Chung Lien Transportation
Performance |
| Timeline |
| Apex Biotechnology Corp |
| Chung Lien Transportation |
Apex Biotechnology and Chung Lien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apex Biotechnology and Chung Lien
The main advantage of trading using opposite Apex Biotechnology and Chung Lien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apex Biotechnology position performs unexpectedly, Chung Lien 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 Chung Lien will offset losses from the drop in Chung Lien's long position.| Apex Biotechnology vs. Grape King Bio | Apex Biotechnology vs. Standard Chemical Pharmaceutical | Apex Biotechnology vs. China Steel Chemical | Apex Biotechnology vs. Sinphar Pharmaceutical Co |
| Chung Lien vs. Datavan International | Chung Lien vs. Gigastorage Corp | Chung Lien vs. K Way Information | Chung Lien vs. Otsuka Information Technology |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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