Correlation Between Tang Eng and Golden Biotechnology
Can any of the company-specific risk be diversified away by investing in both Tang Eng and Golden 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 Golden 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 Golden Biotechnology, you can compare the effects of market volatilities on Tang Eng and Golden 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 Golden Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tang Eng and Golden Biotechnology.
Diversification Opportunities for Tang Eng and Golden Biotechnology
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tang and Golden is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden 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 Golden Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Biotechnology has no effect on the direction of Tang Eng i.e., Tang Eng and Golden Biotechnology go up and down completely randomly.
Pair Corralation between Tang Eng and Golden Biotechnology
Assuming the 90 days trading horizon Tang Eng Iron is expected to generate 0.29 times more return on investment than Golden Biotechnology. However, Tang Eng Iron is 3.46 times less risky than Golden Biotechnology. It trades about 0.0 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.06 per unit of risk. If you would invest 3,185 in Tang Eng Iron on October 16, 2024 and sell it today you would lose (125.00) from holding Tang Eng Iron or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tang Eng Iron vs. Golden Biotechnology
Performance |
| Timeline |
| Tang Eng Iron |
| Golden Biotechnology |
Tang Eng and Golden Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tang Eng and Golden Biotechnology
The main advantage of trading using opposite Tang Eng and Golden Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tang Eng position performs unexpectedly, Golden 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 Golden Biotechnology will offset losses from the drop in Golden Biotechnology's long position.| Tang Eng vs. Compal Electronics | Tang Eng vs. Universal Microelectronics Co | Tang Eng vs. Ligitek Electronics Co | Tang Eng vs. Asmedia Technology |
| Golden Biotechnology vs. Tang Eng Iron | Golden Biotechnology vs. Chung Hung Steel | Golden Biotechnology vs. Tradetool Auto Co | Golden Biotechnology vs. Sunny Friend Environmental |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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