Correlation Between Taiyen Biotech and Leatec Fine

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

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

Diversification Opportunities for Taiyen Biotech and Leatec Fine

0.1

Correlation Coefficient

Taiyen Biotech  Leatec Fine

Average diversification

The 3 months correlation between Taiyen and Leatec is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Taiyen Biotech Co and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics and Taiyen Biotech 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 Taiyen Biotech Co are associated (or correlated) with Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of Taiyen Biotech i.e., Taiyen Biotech and Leatec Fine go up and down completely randomly.

Pair Corralation between Taiyen Biotech and Leatec Fine

Assuming the 90 days trading horizon Taiyen Biotech Co is expected to generate 0.34 times more return on investment than Leatec Fine. However, Taiyen Biotech Co is 2.95 times less risky than Leatec Fine. It trades about 0.21 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about -0.35 per unit of risk. If you would invest  3,230  in Taiyen Biotech Co on December 8, 2024 and sell it today you would earn a total of  55.00  from holding Taiyen Biotech Co or generate 1.7% return on investment over 90 days.

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

Taiyen Biotech Co  vs.  Leatec Fine Ceramics

Taiyen Biotech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taiyen Biotech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taiyen Biotech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Leatec Fine Ceramics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leatec Fine Ceramics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Taiyen Biotech and Leatec Fine

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

The idea behind Taiyen Biotech Co and Leatec Fine Ceramics 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .