Correlation Between OBI Pharma and Te Chang

Can any of the company-specific risk be diversified away by investing in both OBI Pharma and Te Chang 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 OBI Pharma and Te Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for OBI Pharma and Te Chang

-0.52

Correlation Coefficient

OBI Pharma  Te Chang

Excellent diversification

The 3 months correlation between OBI and 5511 is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding OBI Pharma and Te Chang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Te Chang Construction and OBI Pharma 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 OBI Pharma are associated (or correlated) with Te Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Te Chang Construction has no effect on the direction of OBI Pharma i.e., OBI Pharma and Te Chang go up and down completely randomly.

Pair Corralation between OBI Pharma and Te Chang

Assuming the 90 days trading horizon OBI Pharma is expected to under-perform the Te Chang. In addition to that, OBI Pharma is 1.04 times more volatile than Te Chang Construction. It trades about -0.01 of its total potential returns per unit of risk. Te Chang Construction is currently generating about 0.11 per unit of volatility. If you would invest  2,713  in Te Chang Construction on October 4, 2024 and sell it today you would earn a total of  3,667  from holding Te Chang Construction or generate 135.16% return on investment over 90 days.

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

OBI Pharma  vs.  Te Chang Construction

OBI Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

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

Te Chang Construction

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Te Chang Construction are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Te Chang showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OBI Pharma and Te Chang

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

The idea behind OBI Pharma and Te Chang 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.