Correlation Between Tsinghuatongfang and Maccura Biotechnology

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

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

Diversification Opportunities for Tsinghuatongfang and Maccura Biotechnology

0.51

Correlation Coefficient

Tsinghuatongfang  Maccura Biotechnology

Very weak diversification

The 3 months correlation between Tsinghuatongfang and Maccura is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Tsinghuatongfang Co and Maccura Biotechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maccura Biotechnology and Tsinghuatongfang 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 Tsinghuatongfang Co are associated (or correlated) with Maccura Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maccura Biotechnology has no effect on the direction of Tsinghuatongfang i.e., Tsinghuatongfang and Maccura Biotechnology go up and down completely randomly.

Pair Corralation between Tsinghuatongfang and Maccura Biotechnology

Assuming the 90 days trading horizon Tsinghuatongfang Co is expected to under-perform the Maccura Biotechnology. In addition to that, Tsinghuatongfang is 1.66 times more volatile than Maccura Biotechnology Co. It trades about -0.31 of its total potential returns per unit of risk. Maccura Biotechnology Co is currently generating about -0.31 per unit of volatility. If you would invest  1,420  in Maccura Biotechnology Co on October 10, 2024 and sell it today you would lose (136.00) from holding Maccura Biotechnology Co or give up 9.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Tsinghuatongfang Co  vs.  Maccura Biotechnology Co

Tsinghuatongfang

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tsinghuatongfang Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tsinghuatongfang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maccura Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maccura Biotechnology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Tsinghuatongfang and Maccura Biotechnology

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

The idea behind Tsinghuatongfang Co and Maccura 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.