Correlation Between Level Biotechnology and Thye Ming

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

By analyzing existing cross correlation between Level Biotechnology and Thye Ming Industrial, you can compare the effects of market volatilities on Level Biotechnology and Thye Ming 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 Thye Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Level Biotechnology and Thye Ming.

Diversification Opportunities for Level Biotechnology and Thye Ming

0.43

Correlation Coefficient

Level Biotechnology  Thye Ming

Very weak diversification

The 3 months correlation between Level and Thye is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Level Biotechnology and Thye Ming Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thye Ming Industrial 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 Thye Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thye Ming Industrial has no effect on the direction of Level Biotechnology i.e., Level Biotechnology and Thye Ming go up and down completely randomly.

Pair Corralation between Level Biotechnology and Thye Ming

Assuming the 90 days trading horizon Level Biotechnology is expected to generate 3.09 times less return on investment than Thye Ming. But when comparing it to its historical volatility, Level Biotechnology is 1.92 times less risky than Thye Ming. It trades about 0.04 of its potential returns per unit of risk. Thye Ming Industrial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,810  in Thye Ming Industrial on October 11, 2024 and sell it today you would earn a total of  2,780  from holding Thye Ming Industrial or generate 72.97% return on investment over 90 days.

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

Level Biotechnology  vs.  Thye Ming Industrial

Level Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thye Ming Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thye Ming Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Thye Ming 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 Thye Ming

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

The idea behind Level Biotechnology and Thye Ming Industrial 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.