Correlation Between Golden Biotechnology and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Golden Biotechnology and Lihtai Construction 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 Golden Biotechnology and Lihtai Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Biotechnology and Lihtai Construction Enterprise, you can compare the effects of market volatilities on Golden Biotechnology and Lihtai Construction 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 Golden Biotechnology with a short position of Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Biotechnology and Lihtai Construction.
Diversification Opportunities for Golden Biotechnology and Lihtai Construction
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and Lihtai is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction and Golden 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 Golden Biotechnology are associated (or correlated) with Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Lihtai Construction go up and down completely randomly.
Pair Corralation between Golden Biotechnology and Lihtai Construction
Assuming the 90 days trading horizon Golden Biotechnology is expected to generate 14.41 times more return on investment than Lihtai Construction. However, Golden Biotechnology is 14.41 times more volatile than Lihtai Construction Enterprise. It trades about 0.16 of its potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about -0.18 per unit of risk. If you would invest 1,525 in Golden Biotechnology on October 23, 2024 and sell it today you would earn a total of 210.00 from holding Golden Biotechnology or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Biotechnology vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Golden Biotechnology |
| Lihtai Construction |
Golden Biotechnology and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Biotechnology and Lihtai Construction
The main advantage of trading using opposite Golden Biotechnology and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Biotechnology position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction's long position.| Golden Biotechnology vs. Sunspring Metal Corp | Golden Biotechnology vs. Landis Taipei Hotel | Golden Biotechnology vs. Acelon Chemicals Fiber | Golden Biotechnology vs. HOYA Resort Hotel |
| Lihtai Construction vs. Ibase Gaming | Lihtai Construction vs. DingZing Advanced Materials | Lihtai Construction vs. International Games System | Lihtai Construction vs. Golden Biotechnology |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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