Correlation Between Changzhou Almaden and Taiji Computer

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

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

Diversification Opportunities for Changzhou Almaden and Taiji Computer

0.7

Correlation Coefficient

Changzhou Almaden  Taiji Computer

Poor diversification

The 3 months correlation between Changzhou and Taiji is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and Taiji Computer Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiji Computer Corp and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with Taiji Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiji Computer Corp has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and Taiji Computer go up and down completely randomly.

Pair Corralation between Changzhou Almaden and Taiji Computer

Assuming the 90 days trading horizon Changzhou Almaden Co is expected to under-perform the Taiji Computer. But the stock apears to be less risky and, when comparing its historical volatility, Changzhou Almaden Co is 1.43 times less risky than Taiji Computer. The stock trades about -0.13 of its potential returns per unit of risk. The Taiji Computer Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,258  in Taiji Computer Corp on October 8, 2024 and sell it today you would lose (99.00) from holding Taiji Computer Corp or give up 4.38% of portfolio value over 90 days.

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

Changzhou Almaden Co  vs.  Taiji Computer Corp

Changzhou Almaden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changzhou Almaden Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Taiji Computer Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiji Computer Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Taiji Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Changzhou Almaden and Taiji Computer

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

The idea behind Changzhou Almaden Co and Taiji Computer Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.