Correlation Between AptaBio Therapeutics and Chin Yang

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

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

Diversification Opportunities for AptaBio Therapeutics and Chin Yang

0.74

Correlation Coefficient

AptaBio Therapeutics  Chin Yang

Poor diversification

The 3 months correlation between AptaBio and Chin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AptaBio Therapeutics and Chin Yang Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Yang 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 Chin Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Yang Chemical has no effect on the direction of AptaBio Therapeutics i.e., AptaBio Therapeutics and Chin Yang go up and down completely randomly.

Pair Corralation between AptaBio Therapeutics and Chin Yang

Assuming the 90 days trading horizon AptaBio Therapeutics is expected to generate 3.85 times less return on investment than Chin Yang. But when comparing it to its historical volatility, AptaBio Therapeutics is 2.0 times less risky than Chin Yang. It trades about 0.1 of its potential returns per unit of risk. Chin Yang Chemical is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  218,500  in Chin Yang Chemical on December 1, 2024 and sell it today you would earn a total of  239,000  from holding Chin Yang Chemical or generate 109.38% 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.  Chin Yang Chemical

AptaBio Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AptaBio Therapeutics are ranked lower than 8 (%) 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.

Chin Yang Chemical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chin Yang Chemical are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chin Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AptaBio Therapeutics and Chin Yang

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

The idea behind AptaBio Therapeutics and Chin Yang 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.