Correlation Between CHINA DEVELOPMENT and GeneFerm Biotechnology
Can any of the company-specific risk be diversified away by investing in both CHINA DEVELOPMENT and GeneFerm 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 CHINA DEVELOPMENT and GeneFerm Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA DEVELOPMENT FINANCIAL and GeneFerm Biotechnology Co, you can compare the effects of market volatilities on CHINA DEVELOPMENT and GeneFerm 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 CHINA DEVELOPMENT with a short position of GeneFerm Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA DEVELOPMENT and GeneFerm Biotechnology.
Diversification Opportunities for CHINA DEVELOPMENT and GeneFerm Biotechnology
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and GeneFerm is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CHINA DEVELOPMENT FINANCIAL and GeneFerm Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneFerm Biotechnology and CHINA DEVELOPMENT 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 CHINA DEVELOPMENT FINANCIAL are associated (or correlated) with GeneFerm Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneFerm Biotechnology has no effect on the direction of CHINA DEVELOPMENT i.e., CHINA DEVELOPMENT and GeneFerm Biotechnology go up and down completely randomly.
Pair Corralation between CHINA DEVELOPMENT and GeneFerm Biotechnology
Assuming the 90 days trading horizon CHINA DEVELOPMENT FINANCIAL is expected to under-perform the GeneFerm Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, CHINA DEVELOPMENT FINANCIAL is 3.26 times less risky than GeneFerm Biotechnology. The stock trades about -0.1 of its potential returns per unit of risk. The GeneFerm Biotechnology Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,765 in GeneFerm Biotechnology Co on September 15, 2024 and sell it today you would lose (35.00) from holding GeneFerm Biotechnology Co or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA DEVELOPMENT FINANCIAL vs. GeneFerm Biotechnology Co
Performance |
| Timeline |
| CHINA DEVELOPMENT |
| GeneFerm Biotechnology |
CHINA DEVELOPMENT and GeneFerm Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA DEVELOPMENT and GeneFerm Biotechnology
The main advantage of trading using opposite CHINA DEVELOPMENT and GeneFerm Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA DEVELOPMENT position performs unexpectedly, GeneFerm 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 GeneFerm Biotechnology will offset losses from the drop in GeneFerm Biotechnology's long position.| CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. CTBC Financial Holding | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Mid Cap | CHINA DEVELOPMENT vs. YuantaP shares Taiwan Electronics |
| GeneFerm Biotechnology vs. Synmosa Biopharma | GeneFerm Biotechnology vs. Ruentex Development Co | GeneFerm Biotechnology vs. Symtek Automation Asia | GeneFerm Biotechnology vs. CTCI Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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