Correlation Between Premier Products and Tanke Biosciences

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

By analyzing existing cross correlation between Premier Products Group and Tanke Biosciences, you can compare the effects of market volatilities on Premier Products and Tanke Biosciences 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 Premier Products with a short position of Tanke Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Products and Tanke Biosciences.

Diversification Opportunities for Premier Products and Tanke Biosciences

0.0

Correlation Coefficient

Premier Products  Tanke Biosciences

Pay attention - limited upside

The 3 months correlation between Premier and Tanke is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Premier Products Group and Tanke Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanke Biosciences and Premier Products 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 Premier Products Group are associated (or correlated) with Tanke Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tanke Biosciences has no effect on the direction of Premier Products i.e., Premier Products and Tanke Biosciences go up and down completely randomly.

Pair Corralation between Premier Products and Tanke Biosciences

If you would invest  2.00  in Tanke Biosciences on December 21, 2024 and sell it today you would earn a total of  1.21  from holding Tanke Biosciences or generate 60.5% return on investment over 90 days.

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

Premier Products Group  vs.  Tanke Biosciences

Premier Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premier Products Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Premier Products is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Tanke Biosciences

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tanke Biosciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Tanke Biosciences demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Premier Products and Tanke Biosciences

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

The idea behind Premier Products Group and Tanke Biosciences 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.