Correlation Between Lion Biotechnologies and TREECOM
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and TREECOM 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 TREECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and TREECOM, you can compare the effects of market volatilities on Lion Biotechnologies and TREECOM 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 TREECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and TREECOM.
Diversification Opportunities for Lion Biotechnologies and TREECOM
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lion and TREECOM is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and TREECOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TREECOM 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 TREECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TREECOM has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and TREECOM go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and TREECOM
Assuming the 90 days trading horizon Lion Biotechnologies is expected to generate 1.1 times more return on investment than TREECOM. However, Lion Biotechnologies is 1.1 times more volatile than TREECOM. It trades about -0.19 of its potential returns per unit of risk. TREECOM is currently generating about -0.21 per unit of risk. If you would invest 1,006 in Lion Biotechnologies on September 12, 2024 and sell it today you would lose (191.00) from holding Lion Biotechnologies or give up 18.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. TREECOM
Performance |
| Timeline |
| Lion Biotechnologies |
| TREECOM |
Lion Biotechnologies and TREECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and TREECOM
The main advantage of trading using opposite Lion Biotechnologies and TREECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, TREECOM 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 TREECOM will offset losses from the drop in TREECOM's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
| TREECOM vs. DATAGROUP SE | TREECOM vs. GALENA MINING LTD | TREECOM vs. MINCO SILVER | TREECOM vs. Zijin Mining Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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