Correlation Between Embrace Change and Tanke Biosciences
Can any of the company-specific risk be diversified away by investing in both Embrace Change and Tanke Biosciences 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 Embrace Change and Tanke Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embrace Change Acquisition and Tanke Biosciences, you can compare the effects of market volatilities on Embrace Change and Tanke Biosciences 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 Embrace Change with a short position of Tanke Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embrace Change and Tanke Biosciences.
Diversification Opportunities for Embrace Change and Tanke Biosciences
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embrace and Tanke is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Tanke Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanke Biosciences and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Tanke Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanke Biosciences has no effect on the direction of Embrace Change i.e., Embrace Change and Tanke Biosciences go up and down completely randomly.
Pair Corralation between Embrace Change and Tanke Biosciences
Given the investment horizon of 90 days Embrace Change is expected to generate 93.72 times less return on investment than Tanke Biosciences. But when comparing it to its historical volatility, Embrace Change Acquisition is 210.05 times less risky than Tanke Biosciences. It trades about 0.15 of its potential returns per unit of risk. Tanke Biosciences is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Tanke Biosciences on August 29, 2024 and sell it today you would lose (3.24) from holding Tanke Biosciences or give up 81.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embrace Change Acquisition vs. Tanke Biosciences
Performance |
| Timeline |
| Embrace Change Acqui |
| Tanke Biosciences |
Embrace Change and Tanke Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embrace Change and Tanke Biosciences
The main advantage of trading using opposite Embrace Change and Tanke Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embrace Change position performs unexpectedly, Tanke Biosciences 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 Tanke Biosciences will offset losses from the drop in Tanke Biosciences' long position.| Embrace Change vs. China Health Management | Embrace Change vs. Absolute Health and | Embrace Change vs. Supurva Healthcare Group | Embrace Change vs. TransAKT |
| Tanke Biosciences vs. C2E Energy | Tanke Biosciences vs. Supurva Healthcare Group | Tanke Biosciences vs. Kasten Inc | Tanke Biosciences vs. CTR Investments Consulting |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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