Correlation Between Tang Eng and SciVision Biotech

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

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

Diversification Opportunities for Tang Eng and SciVision Biotech

0.53

Correlation Coefficient

Tang Eng  SciVision Biotech

Very weak diversification

The 3 months correlation between Tang and SciVision is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tang Eng Iron and SciVision Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SciVision Biotech and Tang Eng 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 Tang Eng Iron are associated (or correlated) with SciVision Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SciVision Biotech has no effect on the direction of Tang Eng i.e., Tang Eng and SciVision Biotech go up and down completely randomly.

Pair Corralation between Tang Eng and SciVision Biotech

Assuming the 90 days trading horizon Tang Eng is expected to generate 21.76 times less return on investment than SciVision Biotech. But when comparing it to its historical volatility, Tang Eng Iron is 1.97 times less risky than SciVision Biotech. It trades about 0.02 of its potential returns per unit of risk. SciVision Biotech is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  9,430  in SciVision Biotech on December 22, 2024 and sell it today you would earn a total of  3,170  from holding SciVision Biotech or generate 33.62% return on investment over 90 days.

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

Tang Eng Iron  vs.  SciVision Biotech

Tang Eng Iron

Risk-Adjusted Performance

Weak

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

SciVision Biotech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SciVision Biotech are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, SciVision Biotech showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tang Eng and SciVision Biotech

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

The idea behind Tang Eng Iron and SciVision Biotech 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.