Correlation Between Golden Biotechnology and Huang Hsiang

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

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

Diversification Opportunities for Golden Biotechnology and Huang Hsiang

-0.38

Correlation Coefficient

Golden Biotechnology  Huang Hsiang

Very good diversification

The 3 months correlation between Golden and Huang is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction and Golden 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 Golden Biotechnology are associated (or correlated) with Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Huang Hsiang go up and down completely randomly.

Pair Corralation between Golden Biotechnology and Huang Hsiang

Assuming the 90 days trading horizon Golden Biotechnology is expected to under-perform the Huang Hsiang. But the stock apears to be less risky and, when comparing its historical volatility, Golden Biotechnology is 1.88 times less risky than Huang Hsiang. The stock trades about -0.29 of its potential returns per unit of risk. The Huang Hsiang Construction is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  7,090  in Huang Hsiang Construction on September 20, 2024 and sell it today you would lose (870.00) from holding Huang Hsiang Construction or give up 12.27% of portfolio value over 90 days.

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

Golden Biotechnology  vs.  Huang Hsiang Construction

Golden Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Huang Hsiang Construction

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Huang Hsiang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Golden Biotechnology and Huang Hsiang

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

The idea behind Golden Biotechnology and Huang Hsiang 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.