Correlation Between Taisun Enterprise and Great Wall

Can any of the company-specific risk be diversified away by investing in both Taisun Enterprise and Great Wall 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 Taisun Enterprise and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taisun Enterprise Co and Great Wall Enterprise, you can compare the effects of market volatilities on Taisun Enterprise and Great Wall 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 Taisun Enterprise with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taisun Enterprise and Great Wall.

Diversification Opportunities for Taisun Enterprise and Great Wall

0.85

Correlation Coefficient

Taisun Enterprise  Great Wall

Very poor diversification

The 3 months correlation between Taisun and Great is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Taisun Enterprise Co and Great Wall Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Enterprise and Taisun Enterprise 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 Taisun Enterprise Co are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Enterprise has no effect on the direction of Taisun Enterprise i.e., Taisun Enterprise and Great Wall go up and down completely randomly.

Pair Corralation between Taisun Enterprise and Great Wall

Assuming the 90 days trading horizon Taisun Enterprise is expected to generate 1.16 times less return on investment than Great Wall. In addition to that, Taisun Enterprise is 1.13 times more volatile than Great Wall Enterprise. It trades about 0.07 of its total potential returns per unit of risk. Great Wall Enterprise is currently generating about 0.1 per unit of volatility. If you would invest  5,100  in Great Wall Enterprise on September 12, 2024 and sell it today you would earn a total of  210.00  from holding Great Wall Enterprise or generate 4.12% return on investment over 90 days.

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

Taisun Enterprise Co  vs.  Great Wall Enterprise

Taisun Enterprise

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Taisun Enterprise Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taisun Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Great Wall Enterprise

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Wall Enterprise are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Great Wall is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Taisun Enterprise and Great Wall

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

The idea behind Taisun Enterprise Co and Great Wall Enterprise 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.