Correlation Between Taiyen Biotech and San Neng

Can any of the company-specific risk be diversified away by investing in both Taiyen Biotech and San Neng 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 San Neng 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 San Neng Group, you can compare the effects of market volatilities on Taiyen Biotech and San Neng 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 San Neng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiyen Biotech and San Neng.

Diversification Opportunities for Taiyen Biotech and San Neng

0.63

Correlation Coefficient

Taiyen Biotech  San Neng

Poor diversification

The 3 months correlation between Taiyen and San is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Taiyen Biotech Co and San Neng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Neng Group 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 San Neng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Neng Group has no effect on the direction of Taiyen Biotech i.e., Taiyen Biotech and San Neng go up and down completely randomly.

Pair Corralation between Taiyen Biotech and San Neng

Assuming the 90 days trading horizon Taiyen Biotech Co is expected to under-perform the San Neng. But the stock apears to be less risky and, when comparing its historical volatility, Taiyen Biotech Co is 1.33 times less risky than San Neng. The stock trades about -0.32 of its potential returns per unit of risk. The San Neng Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,200  in San Neng Group on September 17, 2024 and sell it today you would earn a total of  25.00  from holding San Neng Group or generate 0.6% return on investment over 90 days.

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

Taiyen Biotech Co  vs.  San Neng Group

Taiyen Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiyen Biotech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

San Neng Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Neng Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Neng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Taiyen Biotech and San Neng

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

The idea behind Taiyen Biotech Co and San Neng Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.