Correlation Between Level Biotechnology and China Times
Can any of the company-specific risk be diversified away by investing in both Level Biotechnology and China Times 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 Level Biotechnology and China Times into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Level Biotechnology and China Times Publishing, you can compare the effects of market volatilities on Level Biotechnology and China Times 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 Level Biotechnology with a short position of China Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Level Biotechnology and China Times.
Diversification Opportunities for Level Biotechnology and China Times
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Level and China is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Level Biotechnology and China Times Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Times Publishing and Level Biotechnology 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 Level Biotechnology are associated (or correlated) with China Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Times Publishing has no effect on the direction of Level Biotechnology i.e., Level Biotechnology and China Times go up and down completely randomly.
Pair Corralation between Level Biotechnology and China Times
Assuming the 90 days trading horizon Level Biotechnology is expected to under-perform the China Times. But the stock apears to be less risky and, when comparing its historical volatility, Level Biotechnology is 6.1 times less risky than China Times. The stock trades about -0.05 of its potential returns per unit of risk. The China Times Publishing is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,945 in China Times Publishing on September 2, 2024 and sell it today you would lose (145.00) from holding China Times Publishing or give up 7.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Level Biotechnology vs. China Times Publishing
Performance |
| Timeline |
| Level Biotechnology |
| China Times Publishing |
Level Biotechnology and China Times Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Level Biotechnology and China Times
The main advantage of trading using opposite Level Biotechnology and China Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Level Biotechnology position performs unexpectedly, China Times 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 China Times will offset losses from the drop in China Times' long position.| Level Biotechnology vs. Medigen Vaccine Biologics | Level Biotechnology vs. TaiMed Biologics | Level Biotechnology vs. Adimmune Corp | Level Biotechnology vs. PharmaEngine |
| China Times vs. Chinese Maritime Transport | China Times vs. Asia Metal Industries | China Times vs. China Metal Products | China Times vs. Tehmag Foods |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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