Correlation Between Tuksu Engineering and Seoulin Bioscience

Can any of the company-specific risk be diversified away by investing in both Tuksu Engineering and Seoulin Bioscience 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 Tuksu Engineering and Seoulin Bioscience into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tuksu Engineering ConstructionLtd and Seoulin Bioscience CoLtd, you can compare the effects of market volatilities on Tuksu Engineering and Seoulin Bioscience 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 Tuksu Engineering with a short position of Seoulin Bioscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tuksu Engineering and Seoulin Bioscience.

Diversification Opportunities for Tuksu Engineering and Seoulin Bioscience

-0.17

Correlation Coefficient

Tuksu Engineering  Seoulin Bioscience

Good diversification

The 3 months correlation between Tuksu and Seoulin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Tuksu Engineering Construction and Seoulin Bioscience CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoulin Bioscience CoLtd and Tuksu Engineering 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 Tuksu Engineering ConstructionLtd are associated (or correlated) with Seoulin Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoulin Bioscience CoLtd has no effect on the direction of Tuksu Engineering i.e., Tuksu Engineering and Seoulin Bioscience go up and down completely randomly.

Pair Corralation between Tuksu Engineering and Seoulin Bioscience

Assuming the 90 days trading horizon Tuksu Engineering ConstructionLtd is expected to generate 1.08 times more return on investment than Seoulin Bioscience. However, Tuksu Engineering is 1.08 times more volatile than Seoulin Bioscience CoLtd. It trades about 0.01 of its potential returns per unit of risk. Seoulin Bioscience CoLtd is currently generating about -0.04 per unit of risk. If you would invest  632,000  in Tuksu Engineering ConstructionLtd on December 24, 2024 and sell it today you would earn a total of  3,000  from holding Tuksu Engineering ConstructionLtd or generate 0.47% return on investment over 90 days.

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

Tuksu Engineering Construction  vs.  Seoulin Bioscience CoLtd

Tuksu Engineering

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tuksu Engineering ConstructionLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tuksu Engineering is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Seoulin Bioscience CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seoulin Bioscience CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seoulin Bioscience is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tuksu Engineering and Seoulin Bioscience

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

The idea behind Tuksu Engineering ConstructionLtd and Seoulin Bioscience CoLtd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.