Correlation Between Tanke Biosciences and CTR Investments

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

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

Diversification Opportunities for Tanke Biosciences and CTR Investments

-0.29

Correlation Coefficient

Tanke Biosciences  CTR Investments

Very good diversification

The 3 months correlation between Tanke and CTR is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Tanke Biosciences and CTR Investments Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTR Investments Cons and Tanke Biosciences 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 Tanke Biosciences are associated (or correlated) with CTR Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTR Investments Cons has no effect on the direction of Tanke Biosciences i.e., Tanke Biosciences and CTR Investments go up and down completely randomly.

Pair Corralation between Tanke Biosciences and CTR Investments

Given the investment horizon of 90 days Tanke Biosciences is expected to generate 1.1 times more return on investment than CTR Investments. However, Tanke Biosciences is 1.1 times more volatile than CTR Investments Consulting. It trades about 0.15 of its potential returns per unit of risk. CTR Investments Consulting is currently generating about 0.1 per unit of risk. If you would invest  2.00  in Tanke Biosciences on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Tanke Biosciences or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Tanke Biosciences  vs.  CTR Investments Consulting

Tanke Biosciences

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tanke Biosciences are ranked lower than 11 (%) 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.

CTR Investments Cons

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CTR Investments Consulting are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, CTR Investments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tanke Biosciences and CTR Investments

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

The idea behind Tanke Biosciences and CTR Investments Consulting 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.