Correlation Between Feng Ching and Level Biotechnology

Can any of the company-specific risk be diversified away by investing in both Feng Ching and Level Biotechnology 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 Feng Ching and Level Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Feng Ching Metal and Level Biotechnology, you can compare the effects of market volatilities on Feng Ching and Level Biotechnology 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 Feng Ching with a short position of Level Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Ching and Level Biotechnology.

Diversification Opportunities for Feng Ching and Level Biotechnology

0.16

Correlation Coefficient

Feng Ching  Level Biotechnology

Average diversification

The 3 months correlation between Feng and Level is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Feng Ching Metal and Level Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Level Biotechnology and Feng Ching 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 Feng Ching Metal are associated (or correlated) with Level Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Level Biotechnology has no effect on the direction of Feng Ching i.e., Feng Ching and Level Biotechnology go up and down completely randomly.

Pair Corralation between Feng Ching and Level Biotechnology

Assuming the 90 days trading horizon Feng Ching Metal is expected to under-perform the Level Biotechnology. In addition to that, Feng Ching is 3.05 times more volatile than Level Biotechnology. It trades about -0.11 of its total potential returns per unit of risk. Level Biotechnology is currently generating about 0.03 per unit of volatility. If you would invest  3,210  in Level Biotechnology on October 26, 2024 and sell it today you would earn a total of  30.00  from holding Level Biotechnology or generate 0.93% return on investment over 90 days.

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

Feng Ching Metal  vs.  Level Biotechnology

Feng Ching Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Feng Ching Metal 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.

Level Biotechnology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Level Biotechnology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Level Biotechnology is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Feng Ching and Level Biotechnology

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

The idea behind Feng Ching Metal and Level Biotechnology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.