Correlation Between Tang Eng and Medigen Biotechnology
Can any of the company-specific risk be diversified away by investing in both Tang Eng and Medigen Biotechnology 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 Tang Eng and Medigen Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tang Eng Iron and Medigen Biotechnology, you can compare the effects of market volatilities on Tang Eng and Medigen Biotechnology 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 Tang Eng with a short position of Medigen Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and Medigen Biotechnology.
Diversification Opportunities for Tang Eng and Medigen Biotechnology
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tang and Medigen is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and Medigen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medigen Biotechnology and Tang Eng 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 Tang Eng Iron are associated (or correlated) with Medigen Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medigen Biotechnology has no effect on the direction of Tang Eng i.e., Tang Eng and Medigen Biotechnology go up and down completely randomly.
Pair Corralation between Tang Eng and Medigen Biotechnology
Assuming the 90 days trading horizon Tang Eng Iron is expected to generate 0.66 times more return on investment than Medigen Biotechnology. However, Tang Eng Iron is 1.52 times less risky than Medigen Biotechnology. It trades about 0.06 of its potential returns per unit of risk. Medigen Biotechnology is currently generating about -0.25 per unit of risk. If you would invest 3,285 in Tang Eng Iron on August 31, 2024 and sell it today you would earn a total of 35.00 from holding Tang Eng Iron or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tang Eng Iron vs. Medigen Biotechnology
Performance |
| Timeline |
| Tang Eng Iron |
| Medigen Biotechnology |
Tang Eng and Medigen Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and Medigen Biotechnology
The main advantage of trading using opposite Tang Eng and Medigen Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, Medigen Biotechnology 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 Medigen Biotechnology will offset losses from the drop in Medigen Biotechnology's long position.| Tang Eng vs. Basso Industry Corp | Tang Eng vs. Chung Hsin Electric Machinery | Tang Eng vs. TYC Brother Industrial | Tang Eng vs. TECO Electric Machinery |
| Medigen Biotechnology vs. Taiwan Semiconductor Manufacturing | Medigen Biotechnology vs. Hon Hai Precision | Medigen Biotechnology vs. MediaTek | Medigen Biotechnology vs. Chunghwa Telecom Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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