Correlation Between Shanrong Biotechnology and TransAtlantic Capital

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

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

Diversification Opportunities for Shanrong Biotechnology and TransAtlantic Capital

0.14

Correlation Coefficient

Shanrong Biotechnology  TransAtlantic Capital

Average diversification

The 3 months correlation between Shanrong and TransAtlantic is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Shanrong Biotechnology Corp and TransAtlantic Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAtlantic Capital and Shanrong 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 Shanrong Biotechnology Corp are associated (or correlated) with TransAtlantic Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAtlantic Capital has no effect on the direction of Shanrong Biotechnology i.e., Shanrong Biotechnology and TransAtlantic Capital go up and down completely randomly.

Pair Corralation between Shanrong Biotechnology and TransAtlantic Capital

Given the investment horizon of 90 days Shanrong Biotechnology Corp is expected to under-perform the TransAtlantic Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shanrong Biotechnology Corp is 1.7 times less risky than TransAtlantic Capital. The pink sheet trades about -0.2 of its potential returns per unit of risk. The TransAtlantic Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.01  in TransAtlantic Capital on October 10, 2024 and sell it today you would earn a total of  0.00  from holding TransAtlantic Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Shanrong Biotechnology Corp  vs.  TransAtlantic Capital

Shanrong Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanrong Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TransAtlantic Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TransAtlantic Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental indicators, TransAtlantic Capital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shanrong Biotechnology and TransAtlantic Capital

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

The idea behind Shanrong Biotechnology Corp and TransAtlantic Capital 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.