Correlation Between Sunmax Biotechnology and ABC Taiwan
Can any of the company-specific risk be diversified away by investing in both Sunmax Biotechnology and ABC Taiwan 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 Sunmax Biotechnology and ABC Taiwan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunmax Biotechnology Co and ABC Taiwan Electronics, you can compare the effects of market volatilities on Sunmax Biotechnology and ABC Taiwan 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 Sunmax Biotechnology with a short position of ABC Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunmax Biotechnology and ABC Taiwan.
Diversification Opportunities for Sunmax Biotechnology and ABC Taiwan
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sunmax and ABC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sunmax Biotechnology Co and ABC Taiwan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC Taiwan Electronics and Sunmax 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 Sunmax Biotechnology Co are associated (or correlated) with ABC Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC Taiwan Electronics has no effect on the direction of Sunmax Biotechnology i.e., Sunmax Biotechnology and ABC Taiwan go up and down completely randomly.
Pair Corralation between Sunmax Biotechnology and ABC Taiwan
Assuming the 90 days trading horizon Sunmax Biotechnology Co is expected to generate 1.3 times more return on investment than ABC Taiwan. However, Sunmax Biotechnology is 1.3 times more volatile than ABC Taiwan Electronics. It trades about 0.08 of its potential returns per unit of risk. ABC Taiwan Electronics is currently generating about 0.01 per unit of risk. If you would invest 20,003 in Sunmax Biotechnology Co on September 5, 2024 and sell it today you would earn a total of 8,497 from holding Sunmax Biotechnology Co or generate 42.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunmax Biotechnology Co vs. ABC Taiwan Electronics
Performance |
| Timeline |
| Sunmax Biotechnology |
| ABC Taiwan Electronics |
Sunmax Biotechnology and ABC Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunmax Biotechnology and ABC Taiwan
The main advantage of trading using opposite Sunmax Biotechnology and ABC Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunmax Biotechnology position performs unexpectedly, ABC Taiwan 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 ABC Taiwan will offset losses from the drop in ABC Taiwan's long position.| Sunmax Biotechnology vs. Feature Integration Technology | Sunmax Biotechnology vs. Lian Hwa Foods | Sunmax Biotechnology vs. United Radiant Technology | Sunmax Biotechnology vs. Materials Analysis Technology |
| ABC Taiwan vs. Wha Yu Industrial | ABC Taiwan vs. Shan Loong Transportation Co | ABC Taiwan vs. Ton Yi Industrial | ABC Taiwan vs. Chinese Maritime Transport |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |