Correlation Between Level Biotechnology and Sun Sea

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

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

Diversification Opportunities for Level Biotechnology and Sun Sea

-0.69

Correlation Coefficient

Level Biotechnology  Sun Sea

Excellent diversification

The 3 months correlation between Level and Sun is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Level Biotechnology and Sun Sea Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Sea Construction and Level Biotechnology 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 Level Biotechnology are associated (or correlated) with Sun Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Sea Construction has no effect on the direction of Level Biotechnology i.e., Level Biotechnology and Sun Sea go up and down completely randomly.

Pair Corralation between Level Biotechnology and Sun Sea

Assuming the 90 days trading horizon Level Biotechnology is expected to generate 0.42 times more return on investment than Sun Sea. However, Level Biotechnology is 2.4 times less risky than Sun Sea. It trades about 0.16 of its potential returns per unit of risk. Sun Sea Construction is currently generating about -0.05 per unit of risk. If you would invest  3,170  in Level Biotechnology on December 21, 2024 and sell it today you would earn a total of  190.00  from holding Level Biotechnology or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.21%
Values	Daily Returns

Level Biotechnology  vs.  Sun Sea Construction

Level Biotechnology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Level Biotechnology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Level Biotechnology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sun Sea Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Sea Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Sea is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Level Biotechnology and Sun Sea

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

The idea behind Level Biotechnology and Sun Sea Construction 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.