Correlation Between ES Ceramics and Ta Ann

Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Ta Ann 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 ES Ceramics and Ta Ann into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ES Ceramics Technology and Ta Ann Holdings, you can compare the effects of market volatilities on ES Ceramics and Ta Ann 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 ES Ceramics with a short position of Ta Ann. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Ta Ann.

Diversification Opportunities for ES Ceramics and Ta Ann

0.28

Correlation Coefficient

ES Ceramics  Ta Ann

Modest diversification

The 3 months correlation between 0100 and 5012 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Ta Ann Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Ann Holdings and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Ta Ann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Ann Holdings has no effect on the direction of ES Ceramics i.e., ES Ceramics and Ta Ann go up and down completely randomly.

Pair Corralation between ES Ceramics and Ta Ann

Assuming the 90 days trading horizon ES Ceramics is expected to generate 3.32 times less return on investment than Ta Ann. In addition to that, ES Ceramics is 2.65 times more volatile than Ta Ann Holdings. It trades about 0.01 of its total potential returns per unit of risk. Ta Ann Holdings is currently generating about 0.05 per unit of volatility. If you would invest  302.00  in Ta Ann Holdings on October 11, 2024 and sell it today you would earn a total of  109.00  from holding Ta Ann Holdings or generate 36.09% return on investment over 90 days.

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

ES Ceramics Technology  vs.  Ta Ann Holdings

ES Ceramics Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, ES Ceramics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ta Ann Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ta Ann Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Ta Ann may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ES Ceramics and Ta Ann

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

The idea behind ES Ceramics Technology and Ta Ann Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .