Correlation Between Tai Tung and Golden Biotechnology
Can any of the company-specific risk be diversified away by investing in both Tai Tung 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 Tai Tung and Golden Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tai Tung Communication and Golden Biotechnology, you can compare the effects of market volatilities on Tai Tung 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 Tai Tung with a short position of Golden Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and Golden Biotechnology.
Diversification Opportunities for Tai Tung and Golden Biotechnology
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tai and Golden is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Biotechnology and Tai Tung 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 Tai Tung Communication 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 Tai Tung i.e., Tai Tung and Golden Biotechnology go up and down completely randomly.
Pair Corralation between Tai Tung and Golden Biotechnology
Assuming the 90 days trading horizon Tai Tung Communication is expected to generate 0.96 times more return on investment than Golden Biotechnology. However, Tai Tung Communication is 1.04 times less risky than Golden Biotechnology. It trades about 0.05 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.07 per unit of risk. If you would invest 1,480 in Tai Tung Communication on November 28, 2024 and sell it today you would earn a total of 850.00 from holding Tai Tung Communication or generate 57.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Tai Tung Communication vs. Golden Biotechnology
Performance |
| Timeline |
| Tai Tung Communication |
| Golden Biotechnology |
Tai Tung and Golden Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and Golden Biotechnology
The main advantage of trading using opposite Tai Tung and Golden Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung 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.| Tai Tung vs. Zinwell | Tai Tung vs. Mercuries Life Insurance | Tai Tung vs. Darwin Precisions Corp | Tai Tung vs. Jinli Group Holdings |
| Golden Biotechnology vs. Shih Kuen Plastics | Golden Biotechnology vs. Champion Building Materials | Golden Biotechnology vs. Farglory FTZ Investment | Golden Biotechnology vs. Ocean Plastics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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