Correlation Between Shin Kong and Tanvex BioPharma

Can any of the company-specific risk be diversified away by investing in both Shin Kong and Tanvex BioPharma 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 Shin Kong and Tanvex BioPharma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shin Kong Financial and Tanvex BioPharma, you can compare the effects of market volatilities on Shin Kong and Tanvex BioPharma 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 Shin Kong with a short position of Tanvex BioPharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Kong and Tanvex BioPharma.

Diversification Opportunities for Shin Kong and Tanvex BioPharma

0.81

Correlation Coefficient

Shin Kong  Tanvex BioPharma

Very poor diversification

The 3 months correlation between Shin and Tanvex is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shin Kong Financial and Tanvex BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanvex BioPharma and Shin Kong 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 Shin Kong Financial are associated (or correlated) with Tanvex BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanvex BioPharma has no effect on the direction of Shin Kong i.e., Shin Kong and Tanvex BioPharma go up and down completely randomly.

Pair Corralation between Shin Kong and Tanvex BioPharma

Assuming the 90 days trading horizon Shin Kong is expected to generate 1.63 times less return on investment than Tanvex BioPharma. But when comparing it to its historical volatility, Shin Kong Financial is 7.23 times less risky than Tanvex BioPharma. It trades about 0.41 of its potential returns per unit of risk. Tanvex BioPharma is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,210  in Tanvex BioPharma on December 27, 2024 and sell it today you would earn a total of  800.00  from holding Tanvex BioPharma or generate 12.88% return on investment over 90 days.

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

Shin Kong Financial  vs.  Tanvex BioPharma

Shin Kong Financial

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Kong Financial are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Shin Kong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tanvex BioPharma

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tanvex BioPharma are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Tanvex BioPharma showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shin Kong and Tanvex BioPharma

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

The idea behind Shin Kong Financial and Tanvex BioPharma 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..