Correlation Between Lion Biotechnologies and THORNEY TECHS
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and THORNEY TECHS 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 THORNEY TECHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and THORNEY TECHS LTD, you can compare the effects of market volatilities on Lion Biotechnologies and THORNEY TECHS 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 THORNEY TECHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and THORNEY TECHS.
Diversification Opportunities for Lion Biotechnologies and THORNEY TECHS
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lion and THORNEY is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and THORNEY TECHS go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and THORNEY TECHS
Assuming the 90 days trading horizon Lion Biotechnologies is expected to generate 1.37 times more return on investment than THORNEY TECHS. However, Lion Biotechnologies is 1.37 times more volatile than THORNEY TECHS LTD. It trades about 0.05 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about 0.02 per unit of risk. If you would invest 597.00 in Lion Biotechnologies on September 3, 2024 and sell it today you would earn a total of 269.00 from holding Lion Biotechnologies or generate 45.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. THORNEY TECHS LTD
Performance |
| Timeline |
| Lion Biotechnologies |
| THORNEY TECHS LTD |
Lion Biotechnologies and THORNEY TECHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and THORNEY TECHS
The main advantage of trading using opposite Lion Biotechnologies and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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