Correlation Between Techfast Holdings and Sunzen Biotech

Can any of the company-specific risk be diversified away by investing in both Techfast Holdings and Sunzen 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 Techfast Holdings and Sunzen Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Techfast Holdings Bhd and Sunzen Biotech Bhd, you can compare the effects of market volatilities on Techfast Holdings and Sunzen 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 Techfast Holdings with a short position of Sunzen Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techfast Holdings and Sunzen Biotech.

Diversification Opportunities for Techfast Holdings and Sunzen Biotech

0.39

Correlation Coefficient

Techfast Holdings  Sunzen Biotech

Weak diversification

The 3 months correlation between Techfast and Sunzen is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Techfast Holdings Bhd and Sunzen Biotech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunzen Biotech Bhd and Techfast Holdings 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 Techfast Holdings Bhd are associated (or correlated) with Sunzen Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunzen Biotech Bhd has no effect on the direction of Techfast Holdings i.e., Techfast Holdings and Sunzen Biotech go up and down completely randomly.

Pair Corralation between Techfast Holdings and Sunzen Biotech

Assuming the 90 days trading horizon Techfast Holdings Bhd is expected to generate 3.74 times more return on investment than Sunzen Biotech. However, Techfast Holdings is 3.74 times more volatile than Sunzen Biotech Bhd. It trades about 0.15 of its potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.01 per unit of risk. If you would invest  5.50  in Techfast Holdings Bhd on October 10, 2024 and sell it today you would earn a total of  1.00  from holding Techfast Holdings Bhd or generate 18.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Techfast Holdings Bhd  vs.  Sunzen Biotech Bhd

Techfast Holdings Bhd

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Techfast Holdings Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Techfast Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sunzen Biotech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunzen Biotech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sunzen Biotech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Techfast Holdings and Sunzen Biotech

The main advantage of trading using opposite Techfast Holdings and Sunzen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techfast Holdings position performs unexpectedly, Sunzen 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 Sunzen Biotech will offset losses from the drop in Sunzen Biotech's long position.

The idea behind Techfast Holdings Bhd and Sunzen Biotech Bhd 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.