Correlation Between ViTrox Bhd and Sunzen Biotech

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

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

Diversification Opportunities for ViTrox Bhd and Sunzen Biotech

0.53

Correlation Coefficient

ViTrox Bhd  Sunzen Biotech

Very weak diversification

The 3 months correlation between ViTrox and Sunzen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding ViTrox 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 ViTrox Bhd 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 ViTrox 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 ViTrox Bhd i.e., ViTrox Bhd and Sunzen Biotech go up and down completely randomly.

Pair Corralation between ViTrox Bhd and Sunzen Biotech

Assuming the 90 days trading horizon ViTrox Bhd is expected to under-perform the Sunzen Biotech. In addition to that, ViTrox Bhd is 1.52 times more volatile than Sunzen Biotech Bhd. It trades about -0.03 of its total potential returns per unit of risk. Sunzen Biotech Bhd is currently generating about 0.01 per unit of volatility. If you would invest  31.00  in Sunzen Biotech Bhd on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Sunzen Biotech Bhd or generate 0.0% return on investment over 90 days.

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

ViTrox Bhd  vs.  Sunzen Biotech Bhd

ViTrox Bhd

Risk-Adjusted Performance

Very Weak

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

Sunzen Biotech Bhd

Risk-Adjusted Performance

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ViTrox Bhd and Sunzen Biotech

The main advantage of trading using opposite ViTrox Bhd and Sunzen Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ViTrox Bhd 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 ViTrox 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.