Correlation Between Lionsgate Studios and Tanke Biosciences

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

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

Diversification Opportunities for Lionsgate Studios and Tanke Biosciences

-0.39

Correlation Coefficient

Lionsgate Studios  Tanke Biosciences

Very good diversification

The 3 months correlation between Lionsgate and Tanke is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lionsgate Studios Corp and Tanke Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tanke Biosciences and Lionsgate Studios 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 Lionsgate Studios Corp 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 Lionsgate Studios i.e., Lionsgate Studios and Tanke Biosciences go up and down completely randomly.

Pair Corralation between Lionsgate Studios and Tanke Biosciences

Given the investment horizon of 90 days Lionsgate Studios Corp is expected to under-perform the Tanke Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Lionsgate Studios Corp is 12.38 times less risky than Tanke Biosciences. The stock trades about -0.02 of its potential returns per unit of risk. The Tanke Biosciences is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Tanke Biosciences on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Tanke Biosciences or generate 100.0% return on investment over 90 days.

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

Lionsgate Studios Corp  vs.  Tanke Biosciences

Lionsgate Studios Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Lionsgate Studios is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Tanke Biosciences

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tanke Biosciences are ranked lower than 9 (%) 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 Lionsgate Studios and Tanke Biosciences

The main advantage of trading using opposite Lionsgate Studios and Tanke Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lionsgate Studios 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 Lionsgate Studios Corp 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.