Correlation Between San Neng and Taiyen Biotech
Can any of the company-specific risk be diversified away by investing in both San Neng and Taiyen Biotech 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 San Neng and Taiyen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between San Neng Group and Taiyen Biotech Co, you can compare the effects of market volatilities on San Neng and Taiyen Biotech 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 San Neng with a short position of Taiyen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of San Neng and Taiyen Biotech.
Diversification Opportunities for San Neng and Taiyen Biotech
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between San and Taiyen is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding San Neng Group and Taiyen Biotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiyen Biotech and San Neng 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 San Neng Group are associated (or correlated) with Taiyen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiyen Biotech has no effect on the direction of San Neng i.e., San Neng and Taiyen Biotech go up and down completely randomly.
Pair Corralation between San Neng and Taiyen Biotech
Assuming the 90 days trading horizon San Neng Group is expected to generate 0.93 times more return on investment than Taiyen Biotech. However, San Neng Group is 1.08 times less risky than Taiyen Biotech. It trades about -0.19 of its potential returns per unit of risk. Taiyen Biotech Co is currently generating about -0.33 per unit of risk. If you would invest 4,300 in San Neng Group on August 30, 2024 and sell it today you would lose (85.00) from holding San Neng Group or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
San Neng Group vs. Taiyen Biotech Co
Performance |
| Timeline |
| San Neng Group |
| Taiyen Biotech |
San Neng and Taiyen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with San Neng and Taiyen Biotech
The main advantage of trading using opposite San Neng and Taiyen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Neng position performs unexpectedly, Taiyen Biotech 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 Taiyen Biotech will offset losses from the drop in Taiyen Biotech's long position.The idea behind San Neng Group and Taiyen Biotech Co 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.| Taiyen Biotech vs. Taiwan Fertilizer Co | Taiyen Biotech vs. Uni President Enterprises Corp | Taiyen Biotech vs. Great Wall Enterprise | Taiyen Biotech vs. Lien Hwa Industrial |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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