Correlation Between TaiMed Biologics and Genovate Biotechnology

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

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

Diversification Opportunities for TaiMed Biologics and Genovate Biotechnology

0.47

Correlation Coefficient

TaiMed Biologics  Genovate Biotechnology

Very weak diversification

The 3 months correlation between TaiMed and Genovate is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding TaiMed Biologics and Genovate Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovate Biotechnology and TaiMed Biologics 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 TaiMed Biologics are associated (or correlated) with Genovate Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovate Biotechnology has no effect on the direction of TaiMed Biologics i.e., TaiMed Biologics and Genovate Biotechnology go up and down completely randomly.

Pair Corralation between TaiMed Biologics and Genovate Biotechnology

Assuming the 90 days trading horizon TaiMed Biologics is expected to generate 1.16 times more return on investment than Genovate Biotechnology. However, TaiMed Biologics is 1.16 times more volatile than Genovate Biotechnology Co. It trades about 0.1 of its potential returns per unit of risk. Genovate Biotechnology Co is currently generating about 0.07 per unit of risk. If you would invest  8,420  in TaiMed Biologics on December 2, 2024 and sell it today you would earn a total of  1,130  from holding TaiMed Biologics or generate 13.42% return on investment over 90 days.

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

TaiMed Biologics  vs.  Genovate Biotechnology Co

TaiMed Biologics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TaiMed Biologics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TaiMed Biologics showed solid returns over the last few months and may actually be approaching a breakup point.

Genovate Biotechnology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genovate Biotechnology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Genovate Biotechnology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TaiMed Biologics and Genovate Biotechnology

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

The idea behind TaiMed Biologics and Genovate Biotechnology Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.