Correlation Between TaiMed Biologics and OBI Pharma
Can any of the company-specific risk be diversified away by investing in both TaiMed Biologics and OBI Pharma 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 TaiMed Biologics and OBI Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TaiMed Biologics and OBI Pharma, you can compare the effects of market volatilities on TaiMed Biologics and OBI Pharma 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 TaiMed Biologics with a short position of OBI Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of TaiMed Biologics and OBI Pharma.
Diversification Opportunities for TaiMed Biologics and OBI Pharma
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TaiMed and OBI is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding TaiMed Biologics and OBI Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OBI Pharma and TaiMed Biologics 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 TaiMed Biologics are associated (or correlated) with OBI Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OBI Pharma has no effect on the direction of TaiMed Biologics i.e., TaiMed Biologics and OBI Pharma go up and down completely randomly.
Pair Corralation between TaiMed Biologics and OBI Pharma
Assuming the 90 days trading horizon TaiMed Biologics is expected to generate 1.49 times more return on investment than OBI Pharma. However, TaiMed Biologics is 1.49 times more volatile than OBI Pharma. It trades about 0.1 of its potential returns per unit of risk. OBI Pharma is currently generating about -0.13 per unit of risk. If you would invest 8,100 in TaiMed Biologics on August 29, 2024 and sell it today you would earn a total of 290.00 from holding TaiMed Biologics or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TaiMed Biologics vs. OBI Pharma
Performance |
| Timeline |
| TaiMed Biologics |
| OBI Pharma |
TaiMed Biologics and OBI Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TaiMed Biologics and OBI Pharma
The main advantage of trading using opposite TaiMed Biologics and OBI Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TaiMed Biologics position performs unexpectedly, OBI Pharma 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 OBI Pharma will offset losses from the drop in OBI Pharma's long position.The idea behind TaiMed Biologics and OBI Pharma pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| OBI Pharma vs. TaiMed Biologics | OBI Pharma vs. PharmaEngine | OBI Pharma vs. Medigen Biotechnology | OBI Pharma vs. TTY Biopharm Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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