Correlation Between AptaBio Therapeutics and Tae Kyung

Can any of the company-specific risk be diversified away by investing in both AptaBio Therapeutics and Tae Kyung 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 AptaBio Therapeutics and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AptaBio Therapeutics and Tae Kyung Chemical, you can compare the effects of market volatilities on AptaBio Therapeutics and Tae Kyung 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 AptaBio Therapeutics with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of AptaBio Therapeutics and Tae Kyung.

Diversification Opportunities for AptaBio Therapeutics and Tae Kyung

0.67

Correlation Coefficient

AptaBio Therapeutics  Tae Kyung

Poor diversification

The 3 months correlation between AptaBio and Tae is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and AptaBio Therapeutics 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 AptaBio Therapeutics are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and Tae Kyung go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and Tae Kyung

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to generate 3.09 times more return on investment than Tae Kyung. However, AptaBio Therapeutics is 3.09 times more volatile than Tae Kyung Chemical. It trades about 0.08 of its potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.05 per unit of risk. If you would invest  637,000  in AptaBio Therapeutics on December 29, 2024 and sell it today you would earn a total of  101,000  from holding AptaBio Therapeutics or generate 15.86% return on investment over 90 days.

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

AptaBio Therapeutics  vs.  Tae Kyung Chemical

AptaBio Therapeutics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AptaBio Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AptaBio Therapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Tae Kyung Chemical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kyung Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tae Kyung is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AptaBio Therapeutics and Tae Kyung

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

The idea behind AptaBio Therapeutics and Tae Kyung Chemical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.