Correlation Between Lion Biotechnologies and Charles Schwab
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and Charles Schwab 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 Lion Biotechnologies and Charles Schwab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and The Charles Schwab, you can compare the effects of market volatilities on Lion Biotechnologies and Charles Schwab 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 Lion Biotechnologies with a short position of Charles Schwab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and Charles Schwab.
Diversification Opportunities for Lion Biotechnologies and Charles Schwab
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and Charles is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with Charles Schwab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Schwab has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and Charles Schwab go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and Charles Schwab
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the Charles Schwab. In addition to that, Lion Biotechnologies is 1.7 times more volatile than The Charles Schwab. It trades about -0.02 of its total potential returns per unit of risk. The Charles Schwab is currently generating about 0.22 per unit of volatility. If you would invest 6,158 in The Charles Schwab on September 13, 2024 and sell it today you would earn a total of 1,606 from holding The Charles Schwab or generate 26.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. The Charles Schwab
Performance |
| Timeline |
| Lion Biotechnologies |
| Charles Schwab |
Lion Biotechnologies and Charles Schwab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and Charles Schwab
The main advantage of trading using opposite Lion Biotechnologies and Charles Schwab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, Charles Schwab 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 Charles Schwab will offset losses from the drop in Charles Schwab's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
| Charles Schwab vs. ACCSYS TECHPLC EO | Charles Schwab vs. Lion Biotechnologies | Charles Schwab vs. GLG LIFE TECH | Charles Schwab vs. Digilife Technologies Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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