Correlation Between STL Technology and Golden Biotechnology
Can any of the company-specific risk be diversified away by investing in both STL Technology and Golden Biotechnology 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 STL Technology and Golden Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STL Technology Co and Golden Biotechnology, you can compare the effects of market volatilities on STL Technology and Golden Biotechnology 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 STL Technology with a short position of Golden Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of STL Technology and Golden Biotechnology.
Diversification Opportunities for STL Technology and Golden Biotechnology
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STL and Golden is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding STL Technology Co and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Biotechnology and STL Technology 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 STL Technology Co are associated (or correlated) with Golden Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Biotechnology has no effect on the direction of STL Technology i.e., STL Technology and Golden Biotechnology go up and down completely randomly.
Pair Corralation between STL Technology and Golden Biotechnology
Assuming the 90 days trading horizon STL Technology Co is expected to generate 3.62 times more return on investment than Golden Biotechnology. However, STL Technology is 3.62 times more volatile than Golden Biotechnology. It trades about 0.52 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.35 per unit of risk. If you would invest 3,550 in STL Technology Co on August 30, 2024 and sell it today you would earn a total of 2,150 from holding STL Technology Co or generate 60.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
STL Technology Co vs. Golden Biotechnology
Performance |
| Timeline |
| STL Technology |
| Golden Biotechnology |
STL Technology and Golden Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STL Technology and Golden Biotechnology
The main advantage of trading using opposite STL Technology and Golden Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STL Technology position performs unexpectedly, Golden Biotechnology 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 Golden Biotechnology will offset losses from the drop in Golden Biotechnology's long position.| STL Technology vs. Simplo Technology Co | STL Technology vs. Amtran Technology Co | STL Technology vs. Allis Electric Co |
| Golden Biotechnology vs. Forest Water Environmental | Golden Biotechnology vs. Sesoda Corp | Golden Biotechnology vs. Loop Telecommunication International | Golden Biotechnology vs. Tai Tung Communication |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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