Correlation Between Hsin Ba and Taiyen Biotech
Can any of the company-specific risk be diversified away by investing in both Hsin Ba 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 Hsin Ba and Taiyen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hsin Ba Ba and Taiyen Biotech Co, you can compare the effects of market volatilities on Hsin Ba 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 Hsin Ba with a short position of Taiyen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hsin Ba and Taiyen Biotech.
Diversification Opportunities for Hsin Ba and Taiyen Biotech
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hsin and Taiyen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hsin Ba Ba and Taiyen Biotech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiyen Biotech and Hsin Ba 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 Hsin Ba Ba 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 Hsin Ba i.e., Hsin Ba and Taiyen Biotech go up and down completely randomly.
Pair Corralation between Hsin Ba and Taiyen Biotech
Assuming the 90 days trading horizon Hsin Ba Ba is expected to under-perform the Taiyen Biotech. In addition to that, Hsin Ba is 4.7 times more volatile than Taiyen Biotech Co. It trades about -0.15 of its total potential returns per unit of risk. Taiyen Biotech Co is currently generating about -0.4 per unit of volatility. If you would invest 3,495 in Taiyen Biotech Co on August 29, 2024 and sell it today you would lose (280.00) from holding Taiyen Biotech Co or give up 8.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hsin Ba Ba vs. Taiyen Biotech Co
Performance |
| Timeline |
| Hsin Ba Ba |
| Taiyen Biotech |
Hsin Ba and Taiyen Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hsin Ba and Taiyen Biotech
The main advantage of trading using opposite Hsin Ba and Taiyen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hsin Ba 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.| Hsin Ba vs. Yulon Motor Co | Hsin Ba vs. Far Eastern Department | Hsin Ba vs. China Steel Corp | Hsin Ba vs. Chang Hwa Commercial |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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